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Tech Trends; Audi's Driverless Car; Yellen Confirmed as U.S. Fed Chief; Stocks Struggle; European Markets Flat; Gold Shocks; Gold Futures; Key Risks for 2014; UK's Year of "Hard Truths"; More Austerity for UK; London Taxi Wars

Aired January 6, 2014 - 16:00   ET



MAGGIE LAKE, CNN INTERNATIONAL HOST: Monday markets. It's the closing bell on Wall Street, where trading is coming to a close. It's Monday, January the 6th.

High expectations for high tech. At the Consumer Electronic Show, we ask if companies are doing enough.

A mini flash crash. Gold folds briefly.

And trouble at the Panama Canal. Spanish officials fly in to try to keep a major construction project from grinding to a halt.

I'm Maggie Lake. This is QUEST MEANS BUSINESS.

The tech trends that will dominate 2014 and beyond are now on show in Las Vegas at the Consumer Electronics Show as it gets underway. We are expecting a glimpse of the future of tech as the biggest companies parade their latest wares.

The stakes have never been higher, with the shows organizers forecasting a 1 percent fall in tech sales this year. The companies making their pitch at CES, Intel's CEO Brian Krzanich will make the keynote address in a few hours. His speech is tipped to focus on the chipmaker's plans to expand into portable and wearable devices as PC sales continue to fall.

There's Yahoo. The firm's stock price doubled last year, but there is pressure on CEO Marissa Mayer to boost the company's revenue.

Twitter is also at CES. Its share price is down more than 4 percent today after another stock downgrade. There's concern over the firm's ability to monetize its content.

Samuel Burke is at the CES Media Day, he's live for us now from Las Vegas. And Samuel, it is sort of striking. There's a lot of celebratory atmosphere there. I know there's a lot of glitz and glamor, it's Las Vegas. Everybody's sort of giving their best pitch.

But the elephant in the room is that a lot of these companies with multimillion-dollar valuations are facing a very uncertain future, including Twitter.

SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Yes, everybody heard that statistic today, and it's on everybody's minds here. In the case of Twitter, many of the analysts I've spoken to, Maggie, say two things.

One, they don't have a diverse revenue stream the way Facebook has. They're resting solely on digital advertising, and we hear over and over again from the companies that advertise online that they're consolidating and they're moving to places like Google and Facebook, which has tens of millions of more users than Twitter has. And so that's why advertisers are going there.

MAGGIE: You know, Samuel, it seems like we've sort of hit a plateau here. There was so much enthusiasm, it was all about mobility, but SmartPhones feel like they've plateaued. I know there's always a lot about TVs there, but same thing. A lot of people are hesitating to upgrade, they're not sure what the future is. There doesn't seem to be a sort of must-have product that's really fueling growth.

BURKE: Yes. For years, first we had the MP3 players, the portable MP3 players. Then just shortly thereafter, you'd get the SmartPhones. Then you'd have tablets. So people aren't quite clear what is that next big gadget, or if it's even going to come at all.

So it feels like here at CES in Las Vegas, bets are on wearable technology, things like Google Glass, or things like Fitbit, which is what I'm wearing here, which allows you to track your health in a way. It allows you to track how many steps you're taking, how you're sleeping, the calories that you're burning.

And Maggie, maybe one that you might need, one that will just wake you up, a silent alarm that doesn't wake up your partner if they sleep later than you sleep. I know you get up really early, Maggie. So again, it seems like everybody's hoping for the wearable technologies to really take off, and they're all integrated with your phones, the ones that are having success.

LAKE: But it's interesting, when I hear that, I know that there's a lot of enthusiasm, I know we've been talking to Shelly, especially in the health area, Shelly Palmer lost a lot of weight. There's -- they think that's going to really innovate the health care. But again, these are not major companies, they're not these sort of well-known titans that are going to really revolutionize things, are they?

BURKE: No, no, no. These are a lot of smaller companies. But they're finding ways to partner with other companies and other platforms. Fitbit, for example, is partnering with some major companies here in the United States in the health care industry, and they're looking to see how they can connect with different platforms.

And the platforms are seeing how they can connect with different devices. Today, Android, which is of course a Google product, announcing how they're going to work with major car companies, like GM, Hyundai, and Audi and how those platforms are moving into screens in those vehicles, Maggie.

LAKE: And I know Google's actually really keen on the health area, too. We've talked to some of the guys at the X Project, and they've been focusing on health for a while. So perhaps not yet, the big guys coming in there.

Samuel, back to cars for a second, though. This is an area where there does seem to be a lot of momentum. I think we've seen more car presence at the Consumer Electronic Show than maybe we have in the past, and I understand you got to take a little bit of a test drive.

BURKE: That's right. It seems very clear for the car industry. They know where they're going, whereas other industries don't quite know how to mix technology. All of these car companies seem like they're headed for these driverless cars.

But Maggie, let's just drop the term "driverless." I got to take a spin in one of these, and it's not black or white, driver or no driver. This is more like how a pilot can go into autopilot sometimes, but you always have that pilot on the plane.

I took it for a spin. There were some bumps along the way. One thing that was interesting, the -- one of these cars from Audi can actually detect when the driver, maybe, falls asleep and shuts their eyes. I want to show you, give you a look what happened when my driver shut his eyes for a bit here in Las Vegas.



UNIDENTIFIED MALE: There you go. So, it's telling me "driver attention" and asking me to take over. I'm not doing that, and it's going to break to a complete stop after ten seconds.


BURKE: Maggie, I have to tell you, it was actually quite scary. I was very uncomfortable in that moment. The person behind me -- in the car behind me was actually your producer, Richard Davis, and he got uncomfortably close to my car.

It came to a sudden stop, the way it's supposed to when it sees that a driver's falling asleep or having some type of health problem. But all of a sudden, Richard was so close to the back of my car when we made that sudden stop.

So, I think that these cars still have a long way to go. Audi is saying two to five years before it's available for production, but again, this is a car that still needs a driver. Take the word "driverless" out of your vocabulary at least for the next decade, I think.

LAKE: Oh, my God. That is one of those things that it either has to be all of us doing it or some of us doing it, and I can tell you, to have that happen on a road into New York City is not something I want to try right away. But it is the future, it seems.

All right, Samuel, great stuff. We look forward to hearing from you from the rest of the week as well. Samuel Burke for us in Las Vegas.

Well, Janet Yellen is poised to become the next chief of the US Federal Reserve. The Senate is expected to confirm her nomination later today to make her the first woman to lead the central bank in its history. Yellen currently serves as the Fed's vice chairwoman. She will replace Ben Bernanke when his second term ends later this month.

The stock markets here in the US are slightly down at the start of the first full week of 2014. Alison Kosik is live for us at the New York Stock Exchange. She joins us now. What seems to be dragging on the markets, Alison? Is it just profit-taking from that big rally that we saw last year?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: A lot of it is taking profits off the table, Maggie, and a lot of it is the waiting, the waiting for the government jobs report coming out on Friday. So you know what? Don't expect any big moves in either direction ahead of this report. And as they wait, as I said, they are taking some profits off the table.

Now, these first few days of the year could be very telling because if you look at the stock traders' almanac, when the S&P 500 has gained in the first five days of the year, the full-year gains have followed 85 percent of the time. Though not so sure we're going to see the S&P 500 come out ahead, though, seeing stocks in the red for the ending of the day today, Maggie.

LAKE: All right, Alison, thank you so much.

KOSIK: Sure.

LAKE: In Europe, markets closed the session largely flat as well. Really, all these markets lacking direction. You can see that the London FTSE -- it's not often you see this absolutely at the flat line. The rest of the markets finishing with marginal losses or gains. Paris CAC 40 the worst performer of the day.

Well, after the break, this is the world's most powerful man, according to Eurasia Group. Next, they'll tell us how he could upset the global economy in 2014.


LAKE: An unusually large trade sends a shock wave through the gold market this morning. It's being called a mini flash crash.

Gold futures lost $30 -- this is the part of the day -- it was pretty much flat, although $30 in the space of just a few seconds when about 4,200 contracts changed hands. That's according to the research firm Nanex. Trading was halted for ten seconds. Some analysts say the trade may have been a mistake.

Separately, Switzerland's central bank suffered a jolt of its own. OK, there we go. The national bank announced a loss of almost $10 billion all because of falling gold prices. The value of its gold reserves have slumped over the past year.

Now, gold experienced, if you remember, a bit of a landslide in 2013. It fell to its first annual loss in more than a decade, down 28 percent. This is an ugly-looking chart. Investors have been dumping gold in favor of stocks as the economy improves.

Well, Scott Shellady is vice president at the Trean Group. He joins us now from the Mercantile Exchange. Scott, I'm usually talking to you at the beginning of the day --


LAKE: -- today it's at the end of the day. Talk to me about what happened in gold. What did you see? What do you think was behind it?

SCOTT SHELLADY, SENIOR VICE PRESIDENT, TREAN GROUP: Well, sometimes I think our own imagination's going to be our biggest enemy, and I think this is simply a case of a fat finger. 8,000 contracts, I think, were really what traded hands, or at least what the CME's saying.

And I -- ultimately, those types of things happen every now and again. It doesn't always have to happen in gold, but we see that probably once or twice a month, there'll be a mistake on these electronic screens, which is how we do business mostly nowadays. So, I'm going to write it off as that.

But I think that the bigger picture here is the fact that you know what? Gold is an inflationary item, a hedge against inflation, and one thing we've learned over this QE or this loose monetary policy is we're not seeing any inflation.

So, we got out in front of it, figuring it was going to be an inflationary environment with the QE, but it just hasn't happened, so that's why you've seen this long, slow decline in gold. And I think it continues.

LAKE: Yes, and that's the question, because a lot of people didn't expect it to go on as long, be as severe. Some hedge funds got caught up in it and they were forced to ultimately bail out. Do we see people get back in, and at what level are we going to continue to see this thing decline?

SHELLADY: Well, there's about three or four things. Number one is what I just talked about, the decline because of the inflation. Number two is that, if you think it's going to be something to give yourself a hedge against some sort of big event, some geopolitical event, you don't want to have gold, you want to have lead. You want to own bullets.

I think that also the bitcoin has taken a little of its luster away. But last thing, I do think this. Even now the Fed is starting to admit, we might be entering a deflationary environment. And in a deflationary environment, I think $1240 gold is pretty expensive. So, yes it's rallied as of late, I'll give you that. But I think that's a little bit of a short cover here, because most folks think it's the bottom, but I think it's just the beginning of the bottom. We could go to $1050 or maybe even $1,000.

LAKE: All right. Something to pay attention to. Scott, great to see you, as always. Scott Shellady from Trean.

SHELLADY: All right.

LAKE: Thank you so much.


LAKE: Well, the days of bad banks and debt defaults are over. Now, politics and power struggles are the things to watch. Eurasia Group has released its list of top risks for 2014. And while the good news is that the treat of the financial collapse is over, the bad news is that geopolitical hazards are back in a big way.

Now, the group says the number one risk for next year is the EU -- the US's standing, rather, overseas. Fallout from the Edward Snowden claims could make it harder for American companies to do business abroad. Countries in Europe and the Middle East might also be less willing to keep such close ties with the US.

While China could stand to benefit, Beijing has problems of its own. The government's trying to create a new China through major reforms at a time when the country's banks are struggling with debts. If something goes wrong, there could be big knock-on effects for the rest of the world.

Another threat is from Russia and other emerging markets. Six major developing economies have elections this year. Unrest in those countries could upset the markets. Eurasia Group says we should also watch Russia, given the bold moves made by President Putin recently on issues like Ukraine and political prisoners.

LAKE: Only last month, Mr. Putin insisted Russia had no intention of upsetting the current world order and took a dig at the US in the process.


VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): We have always been proud of our country, but we do not aspire to be called some kind of a superpower, which is understood as an ambition for global and regional hegemony. We do not encroach on anybody's interests, we do not impose our patronage, we do not teach anybody how to live.


LAKE: David Gordon is Eurasia Group's chairman and head of research. He joins us now from CNN Washington. Always provocative words coming from Putin. David, explain to us, though --


LAKE: -- I can understand from a political landscape why there is concern, controversy surrounding Russia. What is it going to do? Why is it a threat to the global economy?

GORDON: So, I think it has to do with Putin's unusual standing in Russia, that Putin rules Russia in a way that President Obama certainly doesn't rule the United States, or even Xi Jinping in China, that he is the strongest leader in the world.

And I think that he's facing some really severe challenges in 2014, and the question is, how is he going to react to them? So, I think he has one, declining personal popularity, a lot of opposition beginning in Russia to Putin now.

At the same time, the economy is really entering into a rough patch with the likelihood of further downward pressure on energy prices, which will really hurt Russia.

Add on to that the fact that there's a pretty good chance that Putin is going to be not happy about the outcome of the Sochi Olympics, not that there's going to be a terrorist attack in Sochi. I think the Russians are well-protected against that.

But already, we've seen two attacks in Volgograd, there's going to be more, there's going to be a lot of comment on Russian attitudes towards gays, on human rights. And I think in that context, that Putin likes to come up with wild cards, with the big move to squeeze Ukraine, the move with Khodorkovsky. The move vis-a-vis Syria.

Might he do something with China? The looming gas deal with China could put further downward pressure on gas markets. There's a possibility here that the Russians will do something to play a more independent role in the Iranian nuclear negotiations that could throw off the strategies of the United States and the West Europeans.

So, it's not easy to say what it's going to be, but I think we're looking at time when Putin is going to be under increasing pressure. That's how the guy acts, and that's why we had him up as one of our top risks.

LAKE: Right. And we know how investors and global markets feel about something that is so unpredictable. Let's talk about China, because we know that --


LAKE: -- it's a little bit more clear, their importance, their integration in the global economy at this point. What is it that you're concerned about? A lot of attention on these major reforms --

GORDON: Right.

LAKE: -- that have been put out. The plan, a lot of concern whether they can actually execute on it.

GORDON: And I think that's the issue here. The good news is that China is really -- and the leadership is much more serious about reform. They don't see that time is on their side. They're really going to push.

The bad news is, in that context, there are likely to be lots of losers, and the strategy that the Communist Party is using to try to create the ability to undertake these reforms is a recentralization of power that's going to make a lot of people unhappy, local leaders, the -- leadership of the state-owned enterprises.

And as long as things go well, I think we're fine. If they hit a big bump on something like financial liberalization, which they're really going to move much more rapidly on in the next year than we thought. Then who knows what's going to happen? And I think the potential for domestic instability coming out of bumps in the reform process --

LAKE: Right.

GORDON: -- that's the real risk.

LAKE: Right. All at a time when reining in credit is never easy or popular with some sections of the country. We're almost out of time, but what do you think is the thing that you're most worried about? Perhaps something that's a little bit under-the-radar -- I don't know if it's an emerging market country -- that might have the potential to sort of blow up in the way things do in this global economy.

GORDON: Yes. I think we're way too optimistic what's going to happen in India after the election. There's a lot of positive sentiment because the likely new incoming prime minister, Narendra Modi, has been the head of government in Gujarat state. He's been very business-friendly.

But I think that when he gets to Delhi, what -- in the likely role at the head of an unwieldy coalition, things are going to be much, much, tougher. And I think that a lot of optimism that has been in the markets and among foreign investors about where India is heading next year is probably overblown.

LAKE: Another massive economy as well. A lot of excellent information for investors to consider. David Gordon from Eurasia, thank you so much for that.

GORDON: Thank you.

LAKE: Coming up, it's not over yet. That's UK chancellor George Osborne's gloomy warning on austerity measures.


LAKE: 2014 will be the year of hard truths. That's according to UK chancellor George Osborne in his latest speech. Budget cuts are in and the welfare state faces yet another squeeze. His gloomy prediction comes despite new numbers which show business confidence is at a 20-year high.

It's not the only bit of encouraging news. Britain's service sector maintained a yearlong surge in output in December. The pace of growth outstripped the euro zone average and especially France. Unemployment is falling. The UK's jobless rate is now 7.4 percent. That's the lowest since 2009.

However, international borrowing costs remain high. The yield on the ten- year bond is just under 3 percent. Chancellor Osborne says it is not yet time to loosen up on austerity.


GEORGE OSBORNE, UK CHANCELLOR OF THE EXCHEQUER: For the first time in a long time, there's a real sense that Britain is on the rise. Jobs are being created, the deficit is coming down. And that brings its own risks.

As we start the new year, I want to warn you about a dangerous new complacency around in our politics at the moment. You hear some of my political opponents talking as if the hard part of the job is done and we can go back to the old habits.


LAKE: James Sproule is chief economist at the Institute of Directors. He joins me from London. James, this is very foreign to me. I'm in a country where politicians talk up the economy no matter what's actually going on. Why so gloomy?

JAMES SPROULE, CHIEF ECONOMIST, INSTITUTE OF DIRECTION: I don't actually think he is being gloomy. I think he's actually telling the British people some home truths here.

What we've had in the UK was sort of the whole period of the 2000s under Gordon Brown as chancellor was a real expansion of government spending, and at a time when any Keynesian should have been realizing it was time to be putting some money aside, the UK government ran huge, huge deficits, and therefore huge debts.

And it's come time to realize we have to live within our means. And there's no better time to start living within your means than when the economy itself is expanding.

So, I think that one of the things looking back over the last few years that George -- the conservatives didn't do is they didn't prepare the ground all that well when they were in opposition, to saying to people, look, we are overspending. Brown's expansion of the public sector is not sustainable.

So now, they're sort of correcting for that, and they're coming out and they're saying things like it's going to be tough times, we've put through the tax rises bit. We've now got to carry through the spending cuts bit. That's going to be difficult, particularly given there's a coalition government.

But the fact is, we still have to do the right thing for the longer term, and the right thing for the longer term is to lower those taxes, and in order to get lower taxes, the first thing you've got to do is eliminate the really chronic deficit. At one point, we touched ten percent of GDP, it was absolute appalling, and --

LAKE: Well, I'll give you that --

SPROULE: -- this is really part of that stage.

LAKE: Yes, I understand what you're saying, and I'll give you that, but we are at a time where we're coming out of an incredibly hard, damaging, painful financial crisis, global crisis, that really hurt the psyche of not only investors, of consumers.

Isn't there a concern that sort of talking so much about austerity and saying it's not a time for complacency will actually hurt the confidence that's finally come back?

SPROULE: I don't think so. We just completed a survey at the Institute of Directors where we asked people, what do you think is going to happen to UK GDP? What's going to be happening to your revenues? And we had substantial -- like three quarters of our respondents saying that they were expecting to expand revenues in the next year.

So, I think the consumer is feeling pretty good. And what we've seen in the UK so far has been -- if you look at where the recovery is coming, it's largely consumer spending.

Now, the challenge, really, for the next year is to have that narrowly- based economic recovery expanded to a variety of other sectors. So, for instance, business investment, which is still lagging a bit, and UK exports, which have not been as good as anybody would have hoped. So, I think that at the moment, what we need to be doing is expanding that.

As far as what the chancellor should be really looking for in the longer term, it's to be setting a business agenda that gives business the confidence to do the investment which will lead to that broader-based growth out in the future.

LAKE: All right, interesting insight. James Sproule, chief economist for the Institute of Directors, thank you so much for clarifying that message for us.

Japan's Nissan is fighting for a foothold in London's taxi market. It has redesigned a vehicle to rival the city's traditional black cab. Nina Dos Santos brings us this report.


NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT (voice-over): From the horse-drawn carriages of the 1900s to the motorized models of today, the changing face of Britain's capital has been reflected in its jaunty taxis. And now, London's iconic black cab is about to receive another facelift, courtesy of Nissan.

ANDY PALMER, CHIEF PLANNING OFFICER, NISSAN: What we've tried to create here is an iconic vehicle for an iconic city. If you want to create those icons, then you've got to be -- you've really got to be dedicated to doing it properly. And if we were going to do this, we needed to make the bowler hat for the city of London.

DOS SANTOS: The Japanese offering hits the road later this year. Nissan, along with Mercedes Benz, has moved into compete against the current maker, Manganese Bronze, now owned by China's Geely Automotive.

PALMER: We've taken a base vehicle, which is the NV200, but in each case, tried to redesign it in a way that is sympathetic to the particular cities that we're going.

DOS SANTOS: One spoke in the wheel, London's quirky transport laws.

STEVE MACNAMARA, GENERAL SECRETARY, LICENSED TAXI DRIVERS' ASSOCIATION: The rules on taxis in London, the Hackney Carriage Acts, go back to -- wait for it -- 1834. Basically, the motor vehicle has had to fit into that horse- drawn era, which is why vehicles are so high. One of the key things is a gentleman of 5 foot 8 has to be able to sit in the back seat wearing a top hat.

DOS SANTOS (on camera): Adapting a vehicle like this for the streets of London has been a yearlong process for Nissan. For instance, this taxi has a mandatory circle of some 25 feet. The front headlamps, the grill, and the taxi sign, have all had to be specifically redesigned to match the look and feel of the capital's existing fleet.

Would you change one of these for that cab?

MIKE FITZPATRICK, TAXI DRIVER: Well, unfortunately, this has only got about two years left in it, and once that's happened, then yes, I probably would look at the Nissan.

DOS SANTOS (voice-over): The changes in Nissan's model are more than just aesthetic. The company aims to offer an emissions-free vehicle by 2015, in line with London's goal to eradicate polluting taxis from its city center by the decade's end.

So, while one of London's best-loved sights might be about to change, it's worth remember, not all of the capital's black cabs are actually that color.

Nina Dos Santos, CNN, London.


LAKE: Well, Atlanta today is colder than Alaska, if you can believe it, and Memphis is colder than Moscow. There is some brutal weather in the United States, and it's headed this way. We'll have an update next.


LAKE: Welcome back, I'm Maggie Lake, the headlines this hour. The governor of the U.S. state of Illinois has declared a statewide disaster as brutally cold temperatures hit the American Midwest. The National Guard has been drafted in to provide aid. Almost 7,000 people in the state went without power overnight as well as thousands more in neighboring states.

Iraqi Prime Minister Nouri al-Maliki is calling on the people of Fallujah to "expel terrorists." He's dealing with his most serious challenge yet -- an armed uprising by Sunni tribesmen and Al Qaeda-linked militants in Anbar Province. In Israel, doctors say the condition of former prime minister Ariel Sharon likely will continue to worsen by the day unless there is a miracle. The 85-year-old has been in a coma since he suffered a stroke in 2006.

Basketball star Dennis Rodman has arrived in North Korea on his fourth visit to the reclusive state. He arrived with a group of other former NBA players to take part in a basketball game on Kim Jong-un's birthday this Wednesday. German chancellor Angela Merkel has injured in a skiing accident. The 59-year-old fractured her pelvis after falling while she was cross-country skiing in Switzerland. A spokesman for the chancellor said Mrs. Merkel is expected to fully recover.


STEFFEN SEIBERT, GERMAN GOVERNMENT SPOKESMAN, VIA TRANSLATOR: The chancellor contracted severe bruising and a so-called partial fracture in her left back pelvic ring while cross-skiing over her Christmas holidays. This makes it necessary for her to lie down a lot or use a walking device respectively for the next three weeks. Accordingly, she will be concentrating on holding a few official appointments in the chancellery and in Berlin. Otherwise, she will be working from home.


LAKE: Well, the extreme cold weather across the United States is about to hit New York. Conditions in the South and the Midwest have been nothing short of brutal this Monday. Temperatures in the state of Minnesota are down to -48 degrees Celsius. Your skin takes only five minutes to freeze in conditions like that. The weather in the city of Minneapolis has been officially declared, and I quote, "particularly dangerous." Freezing roads have made travel across the country next to impossible. Around 4,000 flights nationwide have been cancelled. Ted Rowlands joins us from a very chilly Chicago. And, Ted, you look like you're freezing. How is everyone coping?

TIM ROWLANDS, CNN CORRESPONDENT: Well, they're freezing, Maggie, that's about it. We're on the Michigan Avenue bridge in Chicago. Normally, this bridge would be packed full of people, but, look, we're the only numbskulls out here. It is 12 below Fahrenheit, I think translates to a million below Celsius. Look at the Chicago River -- the steam coming up - - you don't see that very often. It is amazing on a regular business day for Chicago to be this deserted, but that is what people are being told to do -- to stay home. A lot of employers are telling their employees stay home.

Schools shut down today and will be tomorrow because it is dangerously cold. The biggest problem, frostbite. We were at local hospital here just a few moments ago, talked to one of the surgeons -- or one of the physicians -- and she told us, you know what, this can happen within minutes, and it could be very, very serious.

Is it potentially pretty dangerous -- frostbite -- and what was the worst-case scenario? What happens to the body when it gets that cold and your appendages?

DR. MICHELLE SERGE, EMERGENCY ROOM DOCTOR, COOK COUNTY HOSPITAL: You can actually lose, you know, parts of your tissue -- so it could be eventually have to be amputated. Parts of your tissue could actually die, so you'll have to have pieces of your tissue you know removed or surgically taken out or amputated.

ROWLANDS: And so hopefully, Maggie, we won't have to get anything amputated. I don't think that'll be the case. We're going to scurry into our live truck momentarily. But the headline -- it's cold.

LAKE: And, Ted, I feel guilty even asking you a follow-up -- I know it's had to actually talk when it's that cold. Very quickly, this makes -- I see some cars going past you on the bridge. This makes getting around incredibly treacherous, doesn't it?

ROWLANDS: Yes, especially when you add to the fact we got a foot of snow over the past few days leading up to this cold snap, so now you've got snow that has been cleared for the most part, but what is left has turned to pure ice, especially over bridges. When I was driving in to the city this morning I saw a couple of cars in the ditch because they just simply lost control. It is very slippery, very treacherous. Most people wisely are staying home.

ROWLANDS: All right, we're going to let you get inside, Ted. I don't want any frostbite on my guilty conscience. Thank you so much for braving the elements for us. Appreciate it. Well, Tom Sater is at the CNN International Weather Center to give us an idea of how bad it's going to get, how long it's going to last. Tom, I am frightened looking at those pictures of Ted knowing that this is headed our way. What do we have in store? This is wreaking havoc on travel, isn't it?

TOM SATER, CNN METEOROLOGIST: It really, really is, Maggie, and for you in New York, let's say if your New Year's resolution was have less coffee in the morning, mother nature is going to help you out tomorrow morning. Your wind chill tomorrow morning in New York City, -14 degrees Fahrenheit. For our international viewers, -26 Celsius. We've been talking about this -- this polar vortex if you will. Well, you know, we have this every year, and every year we see it kind of ebb and flow. Higher elevation winds kind of keep that arctic air trapped.

But just like a rubber band, the elasticity every once in a while, it ebbs and flows and gives and takes. We're seeing this cold arctic air plunge all the way down in the southern parts of the U.S. Last year in March in London it was colder on Easter than it was on Christmas. Two years ago in Europe, it was deadly cold. But look at the wind chill values. I mean, when you have numbers that are -39, -40, in fact, International Falls -- it's colder in International Falls with the wind chill than it is in the Arctic Circle -- this is when it gets dangerous. This is known as the icebox of the U.S. -- we're breaking records. It gives you an idea how cold it is, and you can see the forecast. These numbers are brutal, and it feels this way to all pets, livestock -- to all mammals when you factor in the winds.

So, when it is this cold, it's good for everyone to review this. Exposed to skin, all right, in ten minutes frostbite sets in and -35, only five minutes -45 and we've seen numbers already that are -50, -55, -60. It affects automobiles. How about this -- motor oil freezes at -10. Anti- freeze isn't really so 'anti' freeze -- you know, even it has its limits. And -37 in your car, tires start to lose air at -18. Thirty-two states under some sort of warning for the wind -- this is just outrageous. Schools are closed all over the place. Atlanta has been dropping -- they were -3 three -- two and a half hours ago, not it's -6. The numbers are going down.

Take a look at Europe, though. It's colder in Atlanta than it is in Stockholm or Oslo -- it's at 1. Copenhagen is 6, Moscow's at 1 -- nice little warm up. When you talk about this, you can even look at Tuesday. Washington, D.C. a high of -6, -2 in Moscow for our -- 2 degrees in Moscow -- so it's much warmer there. Even in Oslo, a low temperature of 3 compared to -4 in Tallahassee.

Look at the size of the storm though in Europe -- the series, this conveyor belt of storms continues. Eight meter waves off the coast of Portugal, but let me show you some video of what it's like when you are trying to land in the airport in Spain -- if we have that video, it's in Bilboa. They've had to divert five planes, they had to cancel nine other flights. This pilot just cannot seem to handle these crosswinds. Just incredible storm system here. And the outreach and the extent of it across all of Europe. Let's get in a little bit closer because, again, what we do not need with the storm system is more rainfall. As we get into Tuesday morning, still a level one in the same location that we have seen over and over.

To the south and east of London near Hastings in Sussex, we're seeing the collapse of sides of cliffs -- the land is giving way, and there's more rainfall on the way. The good news is, if there's any, even though we have a saturated ground, there are two more systems on the way -- one Wednesday and one late on Sunday. But these are going to be less in intensity, just bringing with it the rain and maybe not so much the severe- ness of the winds. So, at least some good news in the near future. But it has been a crazy month and a half across parts of the northwestern European continent. Back to you.

LAKE: It certainly has. All of this makes me want to just crawl under my covers, I tell you, Tom.

SATER: Why not?

LAKE: Exactly. Thank you so much. Well, the weather has not stopped U.S. Congress from getting back to work. In the next few hours the Senate is planning to vote on a measure that could restore unemployment benefits for more than a million Americans. It's a topic that has become controversial between Democrats and Republicans. Speaking in the past few minutes to our sister network, CNN U.S., the labor secretary, Thomas Perez, said it was vital that those benefits were restored even as the U.S. economy improves.


THOMAS PEREZ, U.S. LABOR SECRETARY: The economy's making progress -- forty- five months in a row of private sector job creation to the tune of 8 million jobs. But our unemployment rate remains too high. The President would be the first to say it. When President Bush signed the law in 2007 or 2008, unemployment was 5.6 or 5.7 percent, the duration of unemployment was 17 weeks. Now we have 36 weeks average duration. Now is not the time to shut off this critical lifeline for so many people.


LAKE: Two countries, billions of dollars and one major problem -- how to widen the Panama Canal. It turns out, it's not as straightforward as they'd planned. We'll explain next.


LAKE: One of the world's biggest construction projects is facing collapse because of a row over the bill. A Spanish construction company is threatening to abandon the project to widen the Panama Canal. It says Panama's government owes it and its partners more than $1 and a 1/2 billion. Spanish government officials are there now trying to rescue the deal. If completed, the alterations would allow bigger ships to carry goods up the canal between Asia and the United States. Nick Parker is following the story for us from Mexico City. And, Nick, this is a story that went from great hope promise to a mess.

NICK PARKER, CNN CORRESPONDENT: Absolutely, Maggie, right now it is certainly looking very much like a mess. As you know, the Panama Canal is a vital shipping point connecting the Atlantic and the Pacific Oceans. Every year it has something like 14,000 transits of ships across the canal of some 80 kilometers long. So certainly an extremely important transit point for the industry.

But in recent years it's been losing competitiveness as it's been unable to accommodate many of the larger vessels that you see in shipping, you know, particularly in the last few years. So in 2007 they began a project -- a $5.2 billion project -- to expand the Canal to accommodate larger ships and to apparently double the capacity to sort of take these goods down the canal.

At the moment, we've seen the situation where the company at the center of this crisis really -- a company called GUPC -- it's a consortium made up of Italian companies, Spanish companies and a Belgian company as well as a Panamanian company. They are supposed to be building three new locks for this expanded canal, which at the moment is something like 72 percent complete. Now what they've said as they're facing spiraling costs is that they are going to have to abandon work on these three locks by January the 20th unless they're given some money by the Panamanian authorities.

So against this backdrop, the Spain public works minister traveled to Panama City where she met with President Martinelli and she told reporters afterwards that at least some dialogue has been opened.


ANA PASTOR, SPANISH PUBLIC WORKS MINISTER, VIA TRANSLATOR: All of the claims are going to be handled and specified in the contract which includes an arbitration process. The first step is to mediate between the parties. After that, third-party mediators come in and finally the international arbitration court. Therefore, this is the first agreement and also that they're going to sit down to talk and dialogue in an effort to solve all the problems.


PARKER: So, Maggie, at the center of the complaints of GUPC -- this consortium -- is essentially that they were given bad information by the regulators of the Canal -- the Canal Authority. In particular, during the bidding process, they were told -- rather they found -- that the information they'd been given after an extensive seven-year geological survey by the Port -- the Canal Authority -- had not turned up a number of important factors that had emerged during this construction. Particularly, they say that there are a number of geological faults along the construction line including one that's something like more than two kilometers long, which has very much slowed down work and added to costs.

And also, they had been planning to use much of the landfill generated by the excavation for concrete -- obviously a massive cost for this project. And they found out that the (basal) material that was unearthed during the excavation is not suitable for the kind of concrete they need. So obviously that has sent costs spiraling as well. Maggie.

LAKE: And of course we're in an age of austerity, so it's not like there is a lot of extra money floating around from any of these governments. All right, Nick Parker, thank you so much for that. The authorities in Panama are not going to simply accept these extra costs. Joining me on the line from Panama City is the CEO of the Panama Canal Authority, Jorge Luis Quijano. Thank you very much, sir, for joining us. And I want to start with the main complaint coming from the consortium, and they said that they received faulty or inaccurate information. What do you say to that?

JORGE LUIS QUIJANO, CEO, PANAMA CANAL AUTHORITY: That is totally false. You know, this is a program that started not in 2000 and even in 7. We started studying this for actually from the year 2000 basically onwards, and we have specialists from all over the world on short-term working with us. So, I you know we gave them 14 months to look over all of the information that was there that we could give them -- documentary information -- but also we gave them access to the areas to do further investigations as they saw fit, including I'd like to point out the fact that we even gave them a stipend, we had a stipend for this (program). The first time that Panama Canal has ever done a stipend for a contract. In this case, there were $15 million, 15 -- 1-5 million-dollar --

LAKE: Yes.

QUIJANO: -- stipend that would be paid for those that did not win the contract. And those monies were for those especially to perform all of the investigations that you needed to do to ensure that when you put in a bid, the bid was the correct bid that actually -- you have assessed all of the critical information that you needed to assess, and you would've spent and in this case at the end there were two bidders that did not win and so they got $7 and a 1/2 billion a piece and they were you know satisfied with that because that's probably more or less what they would have invested in doing all of the --

LAKE: Right

QUIJANO: -- proposals.

LAKE: Right.

QUIJANO: So that's a no-no. We have given them very, very good information and we gave them 14 months because this was not a contract that was put out in a hurry. It was a contract that took a lot of investigation from our side , giving them information, and they having access to the area to verify information if they thought there would be something else (inaudible).

LAKE: Well, thank you for clarifying your side, and for all parties involved, we certainly hope that you're able to find some sort of resolution and the work can continue. Jorge Luis Quijano, thank you for joining us tonight.

QUIJANO: Well, thank you, Maggie. And just -- can I say just something else? I would like to thank you for the opportunity but I want to make sure that everybody in the world understands that the Panama Canal is open to everyone right now and it's doing very well.

LAKE: Excellent. All right, thank you so much. Coming up, CNN goes on the trail of the ivory hunters.


ARWA DAMON, SENIOR INTERNATIONAL CORRESPONDENT FOR CNN: They've all gone forward trying to chase down what seems to be a poacher who at least most definitely is armed.



LAKE: China says it's cracking down on the illegal trade in ivory. For the first time ever, it publically destroyed a large stockpile of ivory confiscated over the years. More than six tons of tusks, carvings and other ivory products were fed into crushers. Beijing says the idea was to make people aware of the need to protect wildlife. China is currently the world's number one market for smuggled ivory. An estimated 70 percent of global supply is sold there. Many of the tusks confiscated on the Chinese border come from Africa.

The International Fund for Animal Welfare says that in the past year, more than 45 tons were confiscated worldwide, the most in 25 years. This week CNN is bringing you a series called "Tracking the Ivory Trade." Arwa Damon had been to the Republic of Congo where she, along with photographer (Peter Rudin) and producer Brent Swails followed a hunt for poachers. I must warn you, some of the images in her report are disturbing.


DAMON: It's been eight grueling, hot hours on this river chasing poachers in the Republic of Congo's largest national park. For these eco-guards, disappointment follows disappointment. When you put your hand inside, it's actually still quite warm which means that they probably left early in the morning. Finally around a bend, signs of activity -- smoke rising along the bank. They rush ashore and fan out into the jungle. Within seconds, a gunshot and the pursuit begins. The terrain is dense and disorienting.

The men force their way through the undergrowth and slosh through knee-deep water. Our CNN team can barely keep up. They've all gone forward trying to chase down what seems to be a poacher who at least most definitely is armed. They appear to have caught him completely by surprise. Mathieu Eckel, head of the park's anti-poaching division brandishes the weapon captured by one of his men.

MATHIEU ECKEL, ANTI-POACHING AGENT: (Inaudible) trying to shoot him.

DAMON: Pumped on adrenaline, Brice Moupele describes what happened.

BRICE MOUPELE, ECO-GUARD, TRANSLATED BY DAMON: "He tried to shoot me like this!" he says.

DAMON: Moupele then tackled the poacher, grabbing the gun but the poacher got away. There's elephant meat in the boat. The men find the poacher's canoe weighed down with fresh elephant meat still dripping blood. Even more hangs off the sides. It's a sickening image of a trade that has decimated the park's elephants. The non-profit group African Parks which runs Odzala estimates that Central Africa has lost 62 percent of its forest elephants in the last decade. In this park alone, thousands have been killed in the last five years. In the week we spent here, we only saw one alive. The park, about the size of Connecticut, is patrolled by just 76 eco-guards -- not nearly enough but some 40 percent of them are former poachers themselves which helps big time.

ECKEL: They know how a poacher work so it's easy for them to seek (inaudible).

DAMON: It's part of a program created by Eckel in the last year where poachers are given amnesty if they hand over their weapons and confess. Eckel aays this raid is proof his program works. But the unit's successes come at a price. This is a country where corruption is routine and where poaching with impunity has been a way of life. All these eco-guards have been threatened. Frank Bolangonga tells us three men attacked his wife. They tried to rape her but she was strong. She pulled back, and her dress ripped off and she ran away he says.

The same men who Bolangonga says are part of his village's poaching ring tried to attack him. He stabbed one of them. The unit doesn't find any elephant ivory but does end up with four guns, ammunition and a cell phone -- a potential lead to the poachers. The eco-guards torched the camp to send a message. These men often find themselves pursuing people that they once worked with -- friends, neighbors and even family members. In the ever-evolving fight against the ivory trade, out here, it's now personal.

Awra Damon, CNN, Odzala National Park, Republic of Congo.


LAKE: We began the show talking about the pressure from tech advancement this year. Well, this next story is certainly proof of that. H&M has made the first shopping-enabled Superbowl ad. The 30-second spot during the game will allow viewers to buy items from David Beckham's H&M Bodywear collection using their remote. That's only if you have the right kind of TV, though. And British defense giant BAE Systems says it's successfully flown a fighter jet with 3D printed parts. A tornado kitted with 3D printed components completed the test flight over England's northwest. The firm says it paves the way for using the technology in other military (kits).

And that is "Quest Means Business." I'm Maggie Lake in New York. Thanks for watching.