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Pope's Message to Davos; Income Inequality; World Economic Outlook; PIMCO CEO Resigns; US Stock Markets Muted; European Markets Flat; Ukraine Protests; Exclusive: Medvedev on Sochi Olympics; Davos Dos and Don'ts

Aired January 21, 2014 - 16:00   ET



RICHARD QUEST, HOST: It's a muted Tuesday on Wall Street. The Dow Jones is losing just a smidgeon on a day when weather's brought New York to a close. It is Tuesday, it's January the 21st.

Tonight, live from Davos, the pope gives a warning to the Davosian members: don't be ruled by money. We speak to the cardinal who issued the pope's message.

Also tonight, the tide is turning on the global economy. The IMF says things are getting better. We have the Fund's chief economist.

I'm Richard Quest, live from the World Economic Forum, where we mean business.

Good evening, live from Davos. The pope is challenging business leaders here in Davos to do more for the world's weakest and most vulnerable people. The message was delivered in an unprecedented address to the World Economic Forum just a few hours ago.

Cardinal Peter Turkson read the remarks prepared by the pontiff. Pope Francis called for a new political and business mentality, and he urged attendees to use their skills to serve the most needy.


PETER TURKSON, CARDINAL, PRESIDENT OF THE PONTIFICAL COUNCIL FOR PEACE AND JUSTICE: It is intolerable that thousands of people continue to die every day from hunger even though substantial quantities are available and often simply wasted. I ask you to ensure that humanity is served by wealth and not ruled by it.


QUEST: Now, just after Cardinal Turkson made the pontiff's statement, His Eminence joined me for an exclusive interview. I asked the cardinal what the pope and the Vatican want business leaders in Davos to do with this message.


TURKSON: What we want them to do is to recognize the fact that the excess of all of these human endeavors serve the one goal of advancing the well-being of the human person. And if at any point or at any moment there is a deficiency in this, then I think we just want to send a small, gentle reminder, that's all.

QUEST: You talk of an -- or His Holiness talks of an inclusive approach.


QUEST: A broader sense of responsibility.


QUEST: And crucially, growth of equality means a better distribution of wealth.

TURKSON: Definitely. This is what we've always believed. The church's social doctrine, which we promote, are based on the essentially four pillars: the dignity of the human person, solidarity, subsidiarity, and then the universal destination of the goods of the Earth. Universal destination of the goods of the Earth invite us all to recognize that the goods of the Earth are destined for all of us.

QUEST: But clearly His Holiness must feel that this level of inequality, not just unacceptable, but getting worse.

TURKSON: It is. That's precisely his great concern. We've been following this -- it's not only His Holiness that feels this way. You probably recall the last time President Obama addressed the Congress, he came out with the same thing, quoted Pope Francis twice, and said he did not -- he didn't understand why in the United States, there wasn't the means of getting people to get out of their poverty, OK?

And he spoke about the inequality in salary and income between people. So, this is a concern of all leaders of the world, if you want to say.

QUEST: Everybody's talking about inequality.


QUEST: Now, by Pope Francis giving this address through yourself, he's really shoved it right to the top of the agenda.


QUEST: In a way that nobody else can. This is --


TURKSON: Probably it just means that all who will be talking about inequality now find a very moral support. They're finding Pope Francis and his words resonate in a kind of support for what they are concerned -- it just means that at the end of the day, belonging to the human family, certain things are indivisible.

Like the experience of peace. You can't have one part of humanity live in peace and the other part not. You can't have one part of humanity live in well-being and the other part not. So, if an invitation to consider the indivisibility of certain human experiences. And it would be good if we can promote this and make it accessible to all.

QUEST: Final question, Your Eminence.


QUEST: Are you surprised by the way in which everybody here has been totally enthralled at the very thought of the pope sending a message, and one goes right to the heart of the elite of the world?


TURKSON: No. I think part of the thrall, which you describe, over here is part of the truth that all of humanity has been experienced with this election, with this leadership of the church, and the direction and the character of his leadership so far.

It's been like a springtime for all of us, even in the church. So, if he's addressed this message over here, they reflect the same concern for the poor, the excluded, and the marginalized in society. It would be a great joy if all of humanity and all gathered shared in this enthusiasm and message of the pope. That's all we pray for, sir.



QUEST: That was Cardinal Turkson speaking to me after he'd delivered the message. The issue of poverty, the issue of inequality and greater wealth and distribution of wealth is very much on the agenda here at Davos. Ken Rogoff is a professor of economics at Harvard University and former chief economist at the IMF. Ken joins me now. Good to see you.


QUEST: In fact, it's always good to see you, always, but here at Davos particularly. Are you surprised that this issue of inequality has bubbled up quite as it has this year.

ROGOFF: Well, it's been festering for a very long time, and as the economy gets better, the rich are getting much better the median worker not so much, and there are many very poor people in the world. So, no, I'm not surprised. And of course, I'm very heartened by what the pope said. It's very hard not to listen to his moral authority.

QUEST: Is this growing inequality a natural result of the vast accommodative policies and monetary easing, the quantitative easing? People who've got money can make money in these easy times.

ROGOFF: There's no question a big peace of this is globalization, so there are cheap workers coming into the workforce, so if you have capital, you're making more money, these workers in the advanced countries are competing with the Indians and the Chinese.

Then there's the machines. They're everywhere. Labor share is falling all over the world. So there are these technological globalization things that are a big part of it.

QUEST: Right. Can they do anything about it? I don't mean just this week at Davos. Are the people here at Davos even receptive to this message, the CEOs, the bankers, the government leaders?

ROGOFF: Well, I don't know. Of course they care, but on the other hand, their profits are up from all of this, and they probably care about that, too. I do think one thing we need to do is see more progressive taxation. There are no simple solutions of trade barriers, saying you can't use robots. That's not going to work. But maybe more progressive taxation. I don't hear a big chant about that here.

QUEST: No, you wouldn't. It'd be turkeys voting for Christmas over there. Let's talk about economic growth. We're going to hear from the chief economist at the IMF, Olivier Blanchard, who you know well, in just a moment on their revised figures. But there's no question, coming here to the -- to Davos, the economic situation is a lot better than you and I have talked about before.

ROGOFF: Yes, it's much better than a year ago. The risks are more balanced. It's not great. It's not like we're growing gangbusters, but you can think of it as many good things that will make it be better as it'll make it be worse. And it has been a long time since I think we could say that.

QUEST: So, all in all, you're content?

ROGOFF: No, come on. I mean, we're still coming out of a recession and there are a lot of people unemployed, but it is healing. There are parts of the world that can get worse, emerging markets, but there's at least more good news than a few years ago, even a year ago.

QUEST: Good to see you as always. Thank you for joining us.

ROGOFF: Pleasure.

QUEST: Ken Rogoff joining us here in Davos. Now, the issue of global growth that we've just been referring to is gathering strength, according to the International Monetary Fund. In an update to its world economic outlook, the IMF has raised its forecast for the world economy. It also warns of fragilities and downside risks.

The IMF asks if the tide is rising. Let's take a look. The IMF says global activity strengthened during the second half of 2013. It's forecasting 3.7 this year, 3.9 next. It's up slightly from the WEO earlier this -- last year.

The IMF says the euro area is turning the corner from recession to recovery. Growth projected at 1 percent in the euro area this year, 1.4 next. The rising tide may not lift all boats. The Fund's warning the recovery in the eurozone will be uneven.

And there are some sharks lurking below the surface. Volatility risks in emerging markets as a result of Fed tapering.

Now, the IMF's chief economist, Olivier Blanchard, joins me from Washington. Olivier, good to talk to you. Thank you for joining us. I know the weather in Washington is appalling and difficult for anybody to get to work, so we appreciate you taking time this evening.

We need to talk about this revision upwards, because everything I'm reading now says that the growth is much more firmly based around the developed economies than the developing economies, and that's different from the past.

OLIVIER BLANCHARD, CHIEF ECONOMIST, IMF: Actually, I'm going to relate to a discussion you just had with Ken. There is one good news about inequality, which is that poor countries are actually growing much faster than more advanced economies. Even sub-Saharan Africa is growing at rates of 6 percent. China, India are growing at rates of 6, 7 percent.

So, if you look at the world as a whole, the countries which were behind are catching up. So, at the world level, there is a decrease in inequality. Now, in each country, there's an increase in inequality, which is a very serious issue.

Now, to go back to the question you asked, yes, there is a sense in which what's happening now is that the advanced economies, which had been growing at a dismal rate, are starting to get their act together, and this is pulling the economy up.

At the same time, it's still the case that emerging market economies are growing faster than advanced economies, right?

QUEST: On this question, last week, the managing director, Christine Lagarde, was very clear when she warned about not only sustainable growth and ensuring the sustainability of growth, but also the ogre of deflation. Do you believe that ogre is now well and truly on our doorstep?

BLANCHARD: Well, I've never seen an ogre, so the question is, what is the probability that there is an ogre behind the door? So, in our baseline, we actually don't see deflation anywhere in the major parts of the world.

The place where I worry is the eurozone, where inflation has been decreasing for a while, and if you just continue the line, it would turn into deflation. May happen, may not happen. Again, not our baseline.

But if you look at market prices or implicit market prices, market signals, you are in the range of maybe there is a 10 percent probability that deflation may come, and that's worrisome. That's not a place where you want to go.

QUEST: So, as we put this together now here at Davos, what do you think, looking at what -- the numbers you've just brought out today, what would be the one question -- inequality, sustainable growth -- that you would wish them to think about here at Davos?

BLANCHARD: Well again, our job at the IMF is to make sure that there is no crisis now. So there are still a large number of things to do to make sure that the recovery continues. Among them, I would cite the banking union in Europe, the process that the ECB is in charge of to make sure that the banks are transparent and recapitalized. This is important.

Now, the issues you talked about with Ken and the pope talked about earlier are clearly central. They're not -- they didn't come from the crisis. The crisis just made them worse.

QUEST: Right.

BLANCHARD: That's clearly what we all have to think about for the next 5, 10, 20 years.

QUEST: Olivier Blanchard, where it's clearly snowing more for you in Washington than it is for me in Davos, but we thank you for joining us this evening and putting it into this.

Now, some news to bring you this evening. An old, good friend of this program, Mohamed El-Erian, the CEO and co-investment chief officer of PIMCO -- you'll be well familiar with Mohamed, he's regularly on this program -- well, he announced today that he is resigning as the CEO of PIMCO Investment Management, which is the US-based asset management company of Allianz.

He is, however, staying on at Allianz as the international executive committee and will advise the board of management. So, Mohamed El-Erian is leaving as CEO of PIMCO, but he is staying in an advisory capacity to the parent company. We'll no doubt hear more about the reasons, whys, and fores, and wherebys in the hours ahead.

To the markets. Terrible weather in Washington, terrible weather in New York, lots of snow for Allison Kosik to belly her way out of to get to work, but the market just lost a fraction.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes, it wasn't such a terrible day. We saw the Dow down as much as 140 points, certainly gained back some of those losses. But do you know what happened today, Richard? Investors were sort of handed a mixed bag. A mixed bag of earnings, really just not enough for Wall Street to get excited about.

We saw the blue chips fall because of these corporate earnings failing to impress. You look at the headline numbers, they looked good. Wall Street wasn't all that pleased, though, with some of the underlying news.

You look at Verizon, Johnson and Johnson, Travelers, all topping estimates. But Richard, investors wanted more. Analysts say results so far, they've been kind of mixed for the fourth quarter. What investors really want to see is bigger revenue gains here for them to get really excited about, Richard.

QUEST: All right, Alison Kosik at the New York Stock Exchange. We thank you for that. Europe's markets were pretty flat this session. Now, this week, we're going to show you something different. Each day that we show you the markets, a little bit different, so join me outside.

This, as you may have met at the beginning of the program, this is GEF, G-E-F. GEF stands for Global Economic Fortunes or Failures. And as for the numbers as you look at GEF, not much movement. You can see Germany's investor confidence fell for the first time in six months. The ZOO markets slipped, off slightly.

Mining shares fell sharply in London and dragged the FTSE into the red. Paris shares lost as well, so we had London down, Paris, the Xetra DAX, the Zurich SMI, they were all happening and they were rising. And we'll show you some pictures later in the program of the snows in New York. Maybe we could have some of that over here.

When we come back, the battles on the streets of Kiev are raging for a second day. We're live in Kiev next.


QUEST: Welcome back to QUEST MEANS BUSINESS. We are live tonight at the World Economic Forum in Davos. Street battles in Ukraine are out of control, according to neighboring Russia. The Russian foreign minister, Sergey Lavrov, spoke out after two days of violence in the Ukrainian capital, Kiev. More than 30 people have been detained and 119 police officers injured.

Demonstrators are angry over new laws coming into effect tomorrow that limit the right to protest. Diana Magnay is live in Kiev tonight. Diana?

DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: Hi, Richard. That's right, these new anti-protest laws are extremely draconian. They promise up to 12 to 15 years in prison for being associated with mass -- with mass disturbances, effectively criminalizing what has been going on on the main -- down on Independence Square beside me -- behind me for the last two months.

It would appear as though the president has decided that enough is enough for these protests and is trying to force the protesters out after all of this time. I don't know if you can hear, there is some vague banging in the background and that is because you have two sites, really, now, Richard, where there are protests.

Here, where it is peaceful, and on European Square, where there have been two nights of serious violence between riot police and protesters, and where there is still some sporadic clashes going on right now, Richard.

QUEST: So, this is obviously more of the same that we have seen from protesters in Ukraine, and I wonder, where does it go from here? Because we've seen these protests before, we've seen them get violent, and then they sort of taper off for a while, even though the protesters may still be on the streets.

MAGNAY: Well, actually, Richard, I beg to differ. The level of violence that we've seen here is much, much higher than at any point in the last two months. It's much more than it was during the 2004 Orange Revolution.

Ukraine has not seen this kind of violence since it saw -- it gained independence. We have police using water canons against protesters. That is illegal in sub-zero temperatures. It's actually classified under Ukrainian legislation as torture. They were using water canons. It is minus 8, minus 10 degrees here.

There have been rubber bullets used against protesters. There have been, according to a media watchdog here, 30 journalists specifically targeted. We have video where a riot policeman literally points his gun directly at a cameraman's camera and fires a rubber bullet.

So, these are much more concerning scenes than we have seen in his country, which is why you have this comment from the European Union to try and quell the disturbances and also, of course, from Russia, which is effectively accusing the West of orchestrating these protests here.

What happens now? Well, this is anyone's guess. But it would appear as thought these protests, which until now have been pretty non-violent, and it's really been riot police action -- brutality which has caused the crowds to swell, now after 60 days of protest, it seems that the protesters have had enough and are taking matters into their own hands. What happens now is anyone's guess, Richard.

QUEST: Diana Magnay, who is in Kiev for us this evening. Thank you, Diana. Now, Russia's prime minister is promising to bolster the number of police officers on duty at the Sochi Olympics. Dmitry Medvedev has been discussing security ahead of the Games, which start on February the 7th. He's been speaking exclusively to our very own Christiane Amanpour.


CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Let me start by asking you about the Sochi Olympics. This is a moment of great pride for Russia, great anticipating for the world's athletes.

And yet, you have a major security threat, a major security alert that your government and security forces have stated. Can you tell me what you know about this threat? How dangerous is it?

DMITRY MEDVEDEV, PRIME MINISTER OF RUSSIA (through translator): On public events, there are always some threats, not only in this country, but also in others. In this country, they have some specific nature and consequences. Definitely we are aware of that, and we will take that into account during the Olympics.

I'm referring to the mobilization and build-up of police forces. And we want -- a huge number of policemen will watch the process of the Games.


QUEST: And you can see the full interview with the Russian prime minister on "Amanpour" on Wednesday night at 7:00 PM in London, that's 11:00 PM in Moscow.

When we come back on QUEST MEANS BUSINESS live from Davos, we have the dos and the definite do nots: how you should behave at the World Economic Forum. Good evening.


QUEST: Now, I'm a veteran of Davos, and tonight, I've got the badge to prove it, the little pin that's still under there somewhere keeping warm. However, even I can learn a thing or two about the correct etiquette when you're attending the World Economic Forum here in the Swiss Alps. Some advice.


QUEST: Ah, Davos!

UNIDENTIFIED MALE: Yes, Richard, you have arrived! Now, all you need to know to make the most of the World Economic Forum, the dos and don'ts of Davos.

TEXT: "THE DOS AND DON'TS OF DAVOS": A public improvement film

QUEST: Morning! Ah, fresh air and picture-perfect Swiss mountains. This is the Davos I came to see.

UNIDENTIFIED MALE: Make the most of it, Richard. This is the only chance you'll get to see this beautiful scenery. You'll be bunkered down in the conference center most of the time.

Chin up and start as you mean to carry on!

QUEST: Ah! I've made it! This is the Forum Headquarters. It's where the panels are held and all those important meetings I'll be having!

UNIDENTIFIED MALE: Not so fast, Richard! Before you have a meeting, do make sure you have stout pair of shoes. I do hope you'll fit.


UNIDENTIFIED MALE: Well done, Richard! That's the spirit.

QUEST: One of the problems of Davos is you'll meet a lot of people you really don't want to meet. So, the answer: two sets of business cards. One has just a generic e-mail and the switchboard phone number. The other has your real details: your direct line and private e-mail.


QUEST: Hello! How are you! Nice to see you!

UNIDENTIFIED MALE: Don't get caught looking at people's chests as you read the titles on their name badges. It's bad form. And remember, only white badges count anyway.

QUEST: Whew! It's exhausting! Time for a break! And ooh, a chance to enjoy a favorite: local hot chocolate.

UNIDENTIFIED MALE: I should go home. Do bring lots of money to Davos.

QUEST: How much?


QUEST: Five-ninety?


UNIDENTIFIED MALE: It's "der teuer," as the locals say.

QUEST: After doing all this work and with whatever little money I've got left, finally, a chance to escape.

UNIDENTIFIED MALE: Oh, no, Richard! You don't get to ski at Davos! Get back to the Forum where you belong! Remember, it's all about improving the state of the world. Good luck!


QUEST: I promise you, in all the years I've been coming to Davos, and it's more than 10 now, I don't think -- I've never skied once for pleasure. It's only been on the mountains if it's being a little bit of skiing for television.

Coming up in just a moment, I'll be speaking to the chairman and chief exec of Total, who joins me here in the cold. He's not wearing a coat. A brave man. We'll be back after 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 Syrian delegation has arrived in Geneva. Ahead a landmark international peace talks which start on Wednesday. Syrian television's reporting the plane was delayed earlier at Athens International Airport after it was prevented from refueling.

Russia has called violent street clashes in neighboring Ukraine 'out of control.' More than 30 demonstrators have been detained and 119 police officers injured in another day of violence in the capital, Kiev. Crowds are angry at sweeping new laws that will limit people's rights to protest. Thousands of flights have been canceled across the United States as severe cold weather moves across the northeast of the country. U.S. Federal government has closed its offices in Washington. This is a live picture now from New York from one of our cameras at CNN Center in New York. The cold snap is due to last until the weekend at least.

Fifty-two passengers rescued from a ship trapped in the Antarctic are finally close to dry land. The Aurora Australis icebreaker has arrived in Tasmania after rescuing the passengers on the second of January. The ship there had been traveling and was stranded in ice on Christmas Eve.

Pope Francis is challenging the business elite to do more to help the world's most needy. Cardinal Peter Turkson delivered remarks that were heard by the Pope tonight at the World Economic Forum in Davos. After the statement, Cardinal Turkson spoke exclusively to me and said all business efforts should serve the dignity of all humans.


TURKSON: What we want them to do is to recognize the fact that the (inaudible) successes of all these human endeavors serve the one goal of advancing the world being the human person. And if at any point or at any moment there is a deficiency in this, then I think you know we just want to sound a small gentle reminder, that's all.


QUEST: Welcome back to Davos. Oil demand could rise dramatically this year as the world's largest economies come out of recession. That's according to the International Energy Agency who predicts that worldwide oil consumption will increase by 1.3 million barrels a day during 2014. That's 50,000 more than previously forecast. The chairman and chief exec of Total is Christophe De Margerie -- he joins me now. Good to see you, sir, thank you.


QUEST: Nice to have you with is us.

DE MARGERIE: Thank you.

QUEST: Now, put this into perspective. The amount of oil that's coming out -- we've seen prices, we've seen a barrel of oil remaining at about 100, 110, 115. Is that where we should expect it to be with demand at its current levels -- with growth coming along?

DE MARGERIE: Well, first I mean, the market is the market. So, you cannot to ask what you want it, is what it is. And today that's a market. Now it's true it has been literally I would say flat during the last three years -- as you said 110 -- is probably the right level because of where it is. Now it's true there are different reasons -- reason is demand starting to restart. Growth --

QUEST: But with growth coming back -

DE MARGERIE: That's a good point. I made a good point for why the price of oil is keeping at that level. On the other side, you have more oil coming -- coming especially from the States. Little (ph) shale gas, you develop them over the world, and different (inaudible) is a good balance between offer and demand. That's why the price remains stable. Why? Stable because offer equals demand.

QUEST: Now you of course have gotten new -- you're into fracking or shale oil if you want to give it its posh name in the United Kingdom, the United States and don't you have any reservations about this new form?

DE MARGERIE: Well I think we should change words. I mean fracking is an awful word. And sometimes -- and I'm serious -- I mean sometimes we use words, we start by definition, killing what we're doing. At the same time, we have -

QUEST: Well give me a better word, give me a better one.

DE MARGERIE: Massaging, massaging -- developing gently. Trying to get the oil out of the ground. Why we are doing this.

QUEST: There's nothing gentle about fracking -- I've been to Texas and seen it.

DE MARGERIE: Well you've seen different things. But if you see what Total is doing, you will see it's clean, it's acceptable, the proof, it's there. The thing is -

QUEST: I can feel my e-mail box bursting with critics saying you're wrong -- it's causing earthquakes, it's causing pollution of water. I can just feel the angst coming back.

DE MARGERIE: Nobody will always accept except that they are pleased to see the price of energy low. They are pleased to see the price of interest low. They are pleased to see the growth of the United States to restart, thanks to low price of energy. Thanks to shale gas.

QUEST: But -- (inaudible)

DE MARGERIE: Not fracking, shale gas. Clean, clean development of shale gas.

QUEST: You have been talking to me a moment ago. But the contradiction between climate change or climate -- the climate issue and growth at the moment. There is a contradiction between the two of them as you see it.

DE MARGERIE: There's a risk of contradiction. To the -- on one side you know we want energy being cheaper. For the growth, on the other side, we say energy needs to be not as cheap, even more expensive to reduce consumption. That is true that the real debate is if as I think the (inaudible) of climate change exists, it should be the priority of states. They should start animating G20, G7, G8 -- whatever climate change. Then it will be considered by all of us as a real important subject. Be careful -- not you. We have to just understand that those in charge as head of state, we are just trying to say what we can say and whether it's important. But they have to tell us. But what it is, they are to be responsible. If they sink, they sink. But the climate change is about (inaudible), they have to make it the first objective in any debate.

QUEST: To date -- today here at Davos the most important subject is inequality. The Pope's representative spoke about it. You're a CEO -- you have the power to start to reverse the imbalance in inequality.


QUEST: Do you?

DE MARGERIE: I agree, it's part of our responsibility. By the way, I was surprised to -- I was there when the envoy of the Pope elected to call him Pope Francois and not Pope Francis -- but it is the same. It's true that he asked us and forced us to go back to the previous important message we had to deliver in Davos -- inequality unacceptable. People will be part of our system is unacceptable. At the same time, we have to cope with all the rest. We have to cope with environment, we have to cope with climate change and we have to cope with acceptability. The good thing is, how can we just make possible that two additional billion (inaudible) before 2050 we come. They would like to get access to (electricity). Yes, to clean, but how can you make those people not out without having access to energy? Tell me.

QUEST: We'll talk about this again.

DE MARGERIE: We need more time.

QUEST: We need more time -- well, you come any day my studio in New York, and you can have as long as you like.

DE MARGERIE: It was my pleasure because I frankly see that that is CEO's responsibility. We cannot -

QUEST: Let's end. Let's end. Thank you.

DE MARGERIE: Thank you.

QUEST: Coming up after the break, the world chief execs says they are looking forward to what comes next. We will talk more about that in just a moment. It's "Quest Means Business." We're at Davos.


QUEST: Welcome back, "Quest Means Business." We are in Davos. An e- mail has just arrived not -- well I'm sure there'll be plenty more arriving on the question we've just been talking about of fracking or massaging or shale gas. On this occasion, it's from Mohamed El-Erian who sent a general e-mail saying, "Taking the liberty of sending a quick e-mail to let you know after really wonderful time at Pimco. I started in 1999, and I will be stepping down as of mid-March. I'd like to convey immediate gratitude for the wonderful times over the years. So, Mohamed El-Erian, we're now confirming of course since we've seen the statement as leaving as chief exec of Pimco, but he will stay on as an advisor to El-Erian's parent company.

Now we want to talk about -- we've heard on this program -- we've heard the industrialist. Now it's time to talk about the financial sector's reaction to the whole question of inequality. The Pope's representative saying that it needs to be a sharing of responsibility, a widening of responsibility, that humanity must be served by wealth, not be ruled by it. Martin Gilbert, the chief exec of Aberdeen Asset Management. Of course you'll agree with what he says, but the question is -- bankers just don't get it. That the share of wealth going to the few is obscene. That's what people are saying.

MARTIN GILBERT, CEO, ABERDEEN ASSET MANAGEMENT: Yes, I mean, I suppose I would start by saying we as fund managers are not bankers and we've spent the last sort of five years trying to differentiate ourselves from the banking sector to -- and I think we do a great job for society. We manage people's money -- that's all we do. And the better job we do, the better off people are. So, we do our bit, but we'd love to do more. And I totally agree with everything he's saying so far.

QUEST: So what can be done to readdress a question of inequality? Obviously, people in the financial services sectors are going to be paid more than the average -- that's a given. But what can be done, do you think? Besides a raising of this as an awareness issue?

GILBERT: Well I think George Osborne had a good start by raising the mini-by suggesting the raising the minimum wage in the U.K. And I think that's a great start. It's those sort of things that try and lift this -- the people at the sort of lowest paid in society up the way I think is the way to go. So I fully support what George Osborne says.

QUEST: Today, we've just heard from the IMF that growth is going to be more toward the developed world -- the U.S., European Union -- not hugely -- the emerging markets are not doing so well.

GILBERT: Well, I think everyone is so negative on emerging markets -

QUEST: Rightly so.

GILBERT: -- but actually they're going to do -- they're going to do swell actually.

QUEST: Well, you're invested in them, you would say that.

GILBERT: Yes, we're one of the biggest in the world in emerging market, as the managers. But the companies do well. And I think the problem with looking at growth is that you actually miss the companies, because the stock market is a lead indicator, and I think we'll see the companies in emerging market say, 'Well you saw the Unilever results today -- very good results from their emerging market operations.'

QUEST: But all emerging markets are not equal.

GILBERT: Absolutely.

QUEST: You and I have spoken about this before, haven't we?

GILBERT: Yes, no, I mean that I think countries like India have good corporate governance, whereas China is more difficult to make money. So we like the Malaysia, Singapore, these sort of -- these sort of countries with good corporate governance. Corporate governance is the key thing in emerging markets.

QUEST: Good to see you. Have a good Davos.

GILBERT: Always sacrifice, always a pleasure.

QUEST: Always lovely to have you on the program. Thank you so much - -

GILBERT: Thank you very much.

QUEST: -- Martin joining me here in Davos. We will be back with more "Quest Means Business" at the World Economic Forum.


QUEST: Just look at it -- they call this a ski resort. There may be snow on the mountains but there's absolutely no snow falling anywhere particularly. The trees are bare, the weather is warm, the snow's starting to melt, and yet in my home -- look what's happening in New York. This is where the snow is falling at the moment. Forget the ski resorts of Davos. And just outside in Columbus Circle -- that looks far more wintry at the moment. Jenny Harrison is at the World Weather Center. As me mother would say, the world's gone topsy-turvy.

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: (LAUGHTER). I was thinking, you seem to always be one step ahead, Richard, of the bad weather. So you know, well done you for missing the big snowstorm. But you're quite right -- there's a distinct lack of snow there in Davos, instead of which of course we've got some huge amounts working their way across the northeast of the United States in the last few hours. It came through into New York first of all, Philadelphia, Washington, eventually up towards Boston -- all the big cities of course are impacted. This is a time lapse of the White House. You can see that 11 o'clock Tuesday morning, and it just goes up until the start of the afternoon. You can see the snow really coming down, it's still snowing there. So the accumulations continuing to add up and you've just shown us the same shot, but I can add on and tell you it is snowing right now. It is -9 degrees Celsius, and the wind certainly at the airport -- from the north at 30 kilometers an hour. So quite breezy, but not bad. So let's hope things continue to move OK on the ground, not the same in the air -- over two and half hours of cancellations. The numbers keep going up as well. Look at this -- New York LaGuardia 316 arrivals, 246 departures -- you can see the numbers for yourself and of course it will likely continue into Wednesday morning. The snow is going to hang around for that long, and in fact Washington, D.C. -- hopefully the delays start coming to an end about 8 o'clock this evening. But you'll notice Philadelphia and New York, Boston continuing into the morning hours of Wednesday. This is a storm system, it's moving quickly but of course it has a long way to clear off that northeast coast. So we'll continue to add up. We could be seeing about 18 centimeters in Philadelphia, 13 in New York before the system is done. There are warnings in place -- even a blizzard warning here about the Cape in Massachusetts, so just be aware of that. And then the snow will hang around because behind this system some very, very cold air, and then by about Thursday, another shot of particularly bitter cold pushing in across the Midwest. This is what it does to temperatures into Wednesday. As much as 35 Celsius below the average. Then we head to Europe. It has been cold across Eastern Europe and we have seen plenty of snow, just not a huge amount of it in Davos. Because, Richard, as you say, pretty mild. It is cloudy right now where you are, the temperature is -3 Celsius, but a very, very light wind. Pretty good visibility and if you want to know what's happening for the next few days -- well, sunny skies on Wednesday. But there should be some very good snowfall, Richard, Thursday night into Friday.

QUEST: Whew!

HARRISON: By then those trees should be covered. So you've got a couple of days, I'm afraid, of green trees. But never mind.

QUEST: Couple of days of green trees with some beautiful snow thereafter. I can live with that. Jenny Harrison at the World Weather Center. Let's bring in some pictures from Hobart in Tasmania -- The Aurora Australis -- the icebreaker rescued 52 passengers from a trapped ship in the Antarctic. The ship there had been traveling and was stranded on Christmas Eve. The shop you're seeing now rescued the passengers and has been making its way to dry land over the past three weeks.

In a moment, an optimistic feel to Davos on this opening day, especially when you talk to chief executives. So, now let's get the "View from the Corner Office." PwC -- used to be PricewaterhouseCoopers in the old days -- says 44 percent of CEOs surveyed believed there'll be an improvement in the global economy over the next 12 months -- up 18 percent last year, a day after (Inaudible) cracked down on tax dodging. Seventy- five percent of CEOs say that being seen to pay a fair share of tax is important to their company, 77 percent concerned about overregulation, more than half, credit regulation with improving standards. I was talking to Dennis Nally of PwC and asked him why CEOs are feeling better.


DENNIS NALLY, CHAIRMAN, PwC: I tell you, the confidence levels of CEOs in the developed markets are higher today than they were 12 months ago versus the confidence levels of CEOs in the developing markets which is actually lower. That's the exact reverse of where things were a year ago.

QUEST: So what is the biggest worry that the CEOs have at the moment?

NALLY: Well, it's interesting. You know we've always had this topic of regulation you know as being one of the top concerns of CEOs. Well, this year in this year's survey it was the number one issue cited by CEOs - - the first time it's ever been in that position.

QUEST: I'm not surprised that CEOs basically say they don't want government or regulation. Tell me something I don't know.

NALLY: Well, I think -- I think CEOs are telling you they want smart regulation. They want regulation that's going to spur growth, that's going to spur investment, that's going to encourage the right type of behaviors.

QUEST: And on government?

NALLY: And on government, we all know that the government is more involved in the economy today than we've ever seen it before. I would also tell you, one of the big issues coming out of the CEO survey is that the trust levels between the business community and governments is at an all- time low. So when you think about that, if that issue isn't effectively addressed, that the governments are going to have such an impact on these economics -- if one can't trust one another, how are you ever going to get smart regulation? How are you going to get smart policies?

QUEST: (Inaudible).

NALLY: That's an issue. That's a challenge.

QUEST: And as everyone says, that inequality -- income inequality, wage inequality, wealth inequality is the number one issue. Do you expect it to be discussed here in Davos or do you expect just a lot of wealthy people touting and nothing getting done?

NALLY: Well, I think it's a real issue and I'd actually broaden the topic. I think the bigger question that's got to be put on the table today is the lack of trust that exists in institutions across the board. And I think if this trust issue isn't effectively addressed, I don't know how we begin to address the bigger topics around -- you know, wage rates, inequality, etc.


QUEST: That's the view from the chief exec suite. I'm joined now by Philip Jennings, the chief secretary general secretary of the Global Union, UNI -- now joining me. Good to see you as always.


QUEST: You must be really pleased that inequality -- the worker's voice, the factory floor, whatever you want to call it -- inequality's on the agenda at Davos in a bigger way than we've ever seen before.

JENNINGS: We're off to a flyer. The Pope tonight talked about inequality, he talked about the distribution of wealth, the World Economic Forum research had shown that distribution of wealth and inequality is the number one concern. Barack Obama says it's the challenge of our times. Union issues back on the Davos agenda.

QUEST: No, no -- that is not -- that is not the same thing as union issues -- inequality. You're confusing the two.

JENNINGS: No, you're confusing the two. Inequality is about distribution of income -

QUEST: Which is not the same -- which is not the same thing as unions.

JENNINGS: It is. What do you think we do, Richard? We sit at the table, we negotiate wages when we're given the chance. Like an organizer workforce, organizer workplace get a collective bargaining agreement, I can start twisting this unfair distribution of income back into reasonable shape. It's about including you. We're about including people -- including people in the share of the wealth.

QUEST: What was the significance of the Pope sending the message do you think?


QUEST: Because there was nothing -- it was nothing new in terms of the message.

JENNINGS: No, but it's very powerful coming from him. From the -- a person that has his congregation worldwide, and he's come into this place trying to convince people they're doing precisely the opposite. People have to level with CEOs. You started tonight, you've been taking them on, you've been making them squirm. You're asking the question. We need the Pope on our side.

QUEST: Right but how -

JENNINGS: I need Barack Obama on my side as well.

QUEST: (Inaudible) you'd love people like that --

JENNINGS: And David Cameron and the others too.

QUEST: Fine, fine but do you think it makes any difference -- do they listen? They know there's an inequality problem.

JENNINGS: I think they're listening. I think they --

QUEST: Why? Why?

JENNINGS: -- because it's not sustainable. We cannot sustain our economies with this level of inequality. It's bad for growth. We have a problem of demand. Why aren't we growing? Because there's no demand out there. Why? Because workers can't afford to buy goods and services -

QUEST: So what do you want -

JENNINGS: -- because they can't buy businesses, no investing.

QUEST: -- give me, give me an example of what policies you now want to seek -- besides your straightforward higher wages?

JENNINGS: No, come on. Minimum wage is a good place to start.

QUEST: You've got it.

JENNINGS: Collective -- no we have not got it. Collective bargaining --

QUEST: You're back to unions again.

JENNINGS: No. The United States of America. Only 6 percent of the private sector workforce is covered by a collective agreement. And you look at the inequality of income question in that country. It is driven by the collective -- collective bargaining. The OECDC, OECD research confirms in 27 of 13 nations, collective bargaining has collapsed -

QUEST: You --

JENNINGS: -- and as a result, inequality has grown.

QUEST: Right

JENNINGS: It is our job -- we're part of the solution.

QUEST: Wait, wait -- you have been coming here for -

JENNINGS: Long time.

QUEST: -- a long time.


QUEST: You obviously see something that's worthwhile, even though at first flush, people would say -- was is union even coming to Davos?

JENNINGS: It's very important we get this message out. It's important that we get involved in the process with the research, in the opinion-forming, that we can talk to CEOs, if we can talk to the United Nations, (Total), IMF and the World Bank and also talk to business leaders. We have something important to say. There are 200 million people unemployed in this world -- half of the world's workforce is in vulnerable employment. We can do something about it, we're part of the solution and that's the message I try to get across in Davos -- and everywhere else I go.

QUEST: It's all about unions, right, thank you very much.


QUEST: Thank you for joining up, Philip.

JENNINGS: Thank you.

QUEST: Good to see you as always. We'll have a "Profitable Moment" on inequality and the Pope and Davos. This is "Quest Means Business."


QUEST: And tonight's "Profitable Moment." So what difference did it make that the Pope sent an envoy to the World Economic Forum? Remember that famous quote in the Second World War -- "How many divisions does the Pope command?" It's really very simple -- he commanded the moral argument and he brought it right into the heart of capitalism to be sure everybody knew inequality was going to be the big issue at Davos. The Pope sending the Cardinal to give that message that humanity must be served by wealth, not ruled by it drove the message home in a way that no other panel or session could possibly do. Inequality is issue one in Davos. And that's "Quest Means Business" for tonight. I'm Richard Quest in Davos. Whatever you're up to in the hours ahead, (RINGS BELL) I do hope it's profitable. I'll see you tomorrow (inaudible).