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QUEST MEANS BUSINESS

Putin Annexes Crimea; Ukrainian Minister Says Fight for Crimea Not Over; Ukrainian Soldier Killed in Crimea; Russian Trade; Moscow Reaction; Relief for Markets; Bankers' Bonuses

Aired March 18, 2014 - 17:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(NEW YORK STOCK EXCHANGE CLOSING BELL)

RICHARD QUEST, HOST: Closing bell rang on Wall Street just about an hour ago. Remember, America changed the clocks, Europe's still the same. So when the closing bell rang, the market results, it was Tuesday, it was the 18th of March.

Tonight, the big story: President Putin claims Crimea. Ukraine's foreign minister on this program says it's a diplomatic war, and he's concerned by the number of troops deployed.

Also tonight, frustration at the lack of information on Flight 370. Frustration turns to anger. Families say they're being kept in the dark.

And in business, profits are down, bonuses are up, and New York's budget watchdog tells me back to pre financial crisis levels.

(BEGIN VIDEO CLIP)

THOMAS DINAPOLI, NEW YORK STATE COMPTROLLER: About 15 percent higher.

QUEST: Fifteen percent higher?

DINAPOLI: Higher. At the same time profits were down, by the way.

QUEST: That's even worse!

(END VIDEO CLIP)

QUEST: I'm Richard Quest. I mean business.

Good evening. We're going to bring you the latest developments in the search for Malaysia Airlines flight tonight. We will update you fully during the course of this program. First though, a dramatic day in Moscow, which has sparked calls for a diplomatic war -- or of a diplomatic war from Kiev.

The Russian president says Crimea is back where it belongs. Vladimir Putin adopted the region into the Russian Federation, and in doing so, defied the threat of Western sanctions. President Putin says he has no plans to annex other parts of Ukraine.

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): Those who say that Russia is intimidating you, frightening you in other regions, we do not want to divide Ukraine, we do not need that. As far as Crimea is concerned, Crimea was and remains Russian.

(END VIDEO CLIP)

QUEST: Those strong and strident words. The president made the move official at a signing ceremony in Moscow. In an hour-long speech, he defended Crimea's right to hold a referendum on splitting from Ukraine. And as he made his comments, he drew loud applause from Russian lawmakers.

(BEGIN VIDEO CLIP)

(APPLAUSE)

(END VIDEO CLIP)

QUEST: Ukraine's foreign minister has accused Russia of escalating the dispute over Crimea into an all-out war. I spoke to Andrii Deshchytsia from Kiev. He says, and he told me, and he was blunt about it -- you're going to hear his views at length -- the fight for Crimea isn't over yet.

(BEGIN VIDEOTAPE)

ANDRII DESHCHYTSIA, UKRAINIAN FOREIGN MINISTER (via telephone): We are not ready to give up Crimea. Crimea used to be, is, and we believe will be a part of Ukraine. And --

(CROSSTALK)

QUEST: How do you -- how --

DESHCHYTSIA: -- it's now to Russian responsibility and the responsibility of the entire world how to stop Russia and return to the positions before the war started.

QUEST: You're describing this as a war now.

DESHCHYTSIA: I'm saying that there's definitely a diplomatic war, because we are trying to use all the diplomatic means to settle the conflict. But since today, the Ukrainian officers were killed, so it's becoming much more tense an explosion into Crimea.

QUEST: What do you want the rest of the world to do, bearing in mind that the Russian Federation and President Putin has seemingly ignored every protest, every measure, talks have singularly failed? Now this has happened, so give me some concrete actions that you would like to see happen.

DESHCHYTSIA: You know that Russia today and during the last few days effectively destroyed the entire system of the international security, which was established after the Second World War. So we have now two options, that this is not the case, or play by the Russian rules.

So, primary responsibility lays upon the UN Security Council at the (inaudible). So, we want the UN and OSCE to send monitoring missions to Ukraine as soon as possible.

QUEST: Do you fear that Crimea first, and soon it will be other mainly-Russian-speaking regions of Ukraine that will be cherry-picked off by Russia?

DESHCHYTSIA: It's -- you have to address this question to Russian leadership. We are very much concerned with the number of troops deployed on the Ukrainian eastern border, with the number of so-called Russian tourists, political tourists, visiting Ukraine and making provocations and in -- particularly in eastern and southern parts of Ukraine.

And this might create a real conflict that might lead to the war. So with that, there is possibility of all of us, it's not only Ukraine that will be affected, but regional security, Europe, and maybe the global security.

QUEST: In the course of this interview, you've talked about confrontation, you've talked about diplomatic wars, you've talked about even potential real wars. The danger here now is that the -- far from de- escalating, as has been said by every diplomat and politician, that basically the West does nothing and the Russians and President Putin get away with it, in their view. That's your biggest problem now, isn't it?

DESHCHYTSIA: Yes, we are trying to -- not -- to convince our partners on the west that it's not only Ukraine, that's what I said, will be affected. But everyone will be affected. And it should be a very strong, united common position against Russia that Russia, who violated the international law. Not only Ukrainian-Russian bilateral agreements, but the international law and UN charter.

QUEST: Minister, my final question: the diplomats, the world's diplomats, the United Nations Security Council, there'll be a lot of finger-wagging, there'll be a lot of tut-tutting, there'll be a lot of "Oh, dear, this is dreadful." But unless they actually do something, you've lost Crimea, sir.

DESHCHYTSIA: I think that now we have to move from the statement -- strong statements to the concrete actions. And we do believe that our partners in the world do understand this also.

(END VIDEOTAPE)

QUEST: Look at the map, and let me tell you that Ukraine's Defense Ministry has given orders for its troops in Crimea to use their weapons if it is to protect the lives of soldiers. Officials say a serviceman has been killed and another seriously wounded at an attack at a military base in Simferopol, which is the first -- violence, if you like, of this official violence.

In Simferopol, that's where our senior international correspondent Nick Paton Walsh joins me now. So, if Moscow is to be believed now, it's all done and dusted, Crimea is part of Russia. What do they believe where you are in the capital of Crimea?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Many people here consider themselves -- or considered themselves, frankly, as soon as we heard the results of the referendum on Sunday considered themselves to be part of Russia. That simply rubber-stamped today by Vladimir Putin's actions in Moscow.

But part of his speech was used, in fact, to talk about how this had been a bloodless annexation of Crimea. Not so. Simply hours later, we had this incident at a base here in Simferopol. One man killed, the chief warrant officer on the base, shot in the heart, according to a Ukraine Defense Ministry statement. And then another soldier there shot in the neck, injured.

It seems that Russian troops -- we say Russian, but they're obviously not wearing markings, none of them are here despite Vladimir Putin's comments so openly in Moscow today. They came onto the base, an altercation obviously ensued, and the crew we sent down there saw signs of an exchange of gunfire.

Then after, a large number of heavily-armed and masked men moved onto the base, and it's now under their control. But there are so many bases like this, Richard, across, the Crimean peninsula. Ukrainian soldiers still holding out, still loyal to the new government in Kiev.

I went to one of them myself in the northwest of the country just hours ago. They, too, had a large number of heavily-armed Russian troops moving around their walls, trying to intimidate them to move. I should also say pro-Russian peaceful demonstrators --

QUEST: Right. And --

WALSH: -- and the local officials trying to get them to give themselves up voluntarily. But the real fear is the potential for this tension to suddenly spark off, and we see casualties like that. Richard?

QUEST: Nick, the question I asked the foreign minister a moment ago, as seen from your vantage point now in Crimea -- look, I don't want to make too much of it, but this is a done deal. This has happened. It's over.

WALSH: I mean it was, in many ways, days ago, to be honest. We've seen, really, I think the ice on the cake, Vladimir Putin, his chance to for about an hour talk about the -- to me, they want to set the clock back 25 years in terms of Russia's standing in the world.

Yes, there's no real way, I think, without significant bloodshed or perhaps outside help that Ukraine's government can retake Crimea. It's now a de facto part of Russia, although the world, of course, will unlikely never recognize that unless something drastically changes in the situation here. The question is, what happens to those who are not happy with it who are still in Crimea itself, Richard?

QUEST: Nick Paton Walsh in the Crimean capital tonight for us. Thank you, sir. Thank you.

The head of Russia's biggest oil producer says the country doesn't need to rely on the West for business. Igor Sechin is the chief executive, the CEO of Rosneft, and said, "From the business point of view of Russian companies, there is somewhere to transfer our activities to. As a global economy, a large world in which will be European or America, they have not been the masters for a long time."

Now, that may be a challenge when you look at the current -- country's current trading partners. Join me at the super screen and you will see exactly what I mean. Because the truth is, the European Union is by far Russia's biggest export market, and it dwarfs every other country as a consumer of Russian goods.

So, if you look and see exactly, the top export markets, European Union is 45 percent -- these are from the WTO. China is 6.4 percent, Belarus 4 percent, Turkey 3 percent, Japan is 2.9 percent. But the EU at 45.1 percent is really quite extraordinarily large. And the bilateral trade number is also very substantial. It runs to more than $400 billion a year.

So -- and it's mainly one -- it's heavily one way, except for oil which, of course, natural products goes that way, industrial products goes the other way. Put it all together and Russia stands to be heavily affected by what's taken place.

Britain's foreign secretary warned of the grave danger of further military escalation by Russia elsewhere. William Hague condemned Moscow's move to annex Crimea.

(BEGIN VIDEO CLIP)

WILLIAM HAGUE, BRITISH FOREIGN SECRETARY: It was regrettable to hear President Putin today choosing the route of isolation, denying the citizens of his own country and of Crimea partnership with the international community and full membership of a range of international organizations and Russia's right to help shape the 21st century in a positive manner.

(END VIDEO CLIP)

QUEST: Now, the reaction now from Moscow. Phil Black joins us live from the Russian capital. Phil, we've seen the pictures, the triumphalist pictures of President Putin. So, the long and short of it, since we're a business program tonight. You've talked the politics. Will they be concerned by sanctions, by being shut out from the West, or by banking restrictions?

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: I think, Richard, that this is about how the individuals that have been named in these sanctions will feel, and what we've heard from them so far is no, they're not worried at all.

Because these are middle-to-senior members of the political system in this country. These are people who are part of a political system that takes a very anti-Western, anti-American line, has done for a few years now. And so, it is no surprise that they have come out and said, we don't have an assets --

QUEST: Right.

BLACK: -- in the United States, or things that would be vulnerable to these sorts of sanctions. Some of them might not get to travel through Europe in the next six months. That could potentially be a problem. But no, I think that certainly Russia at the moment is certainly very much prepared to deal with the consequences of them as they've been spelled out so far.

QUEST: So, with that in mind, is effectively sanctioning the oligarchs, the big business, those that actually do business in London, in Frankfurt, in Paris, is that the way, do you think, to get not just Moscow's attention, but the business leaders themselves then put pressure on Putin and the government?

BLACK: They are certainly the members of the elite that do require upon that sort of financial freedom, that sort of access to Western financial markets and so forth.

But these are also the people, as you know, that bring money and finance and business and growth into these Western and European markets as well. So, these are also the people that perhaps the West are not keen on the idea of shutting out from their markets or hitting with sanctions directly.

There is room to escalate in that direction, but so far, there has -- we have not seen the willingness from Europe in particular to take that sort of direction, Richard.

QUEST: Finally, Phil, the impossible question, so feel free just to bung it straight back at me with a heavy ball. Is it the feeling in Moscow that there's another bit of Ukraine to be annexed?

BLACK: I don't think that any other part of Ukraine has the same connection, if you like, to what people refer to as the Russian soul quite like Crimea does. Crimea is what people here have always spoke about as this extension of Russia, always part of Russia.

That was the overwhelming theme of Putin's speech today. This was a land and a people that have really, in theory, never been out of our hearts and our souls. Putin spoke directly to the talk that there could be more of Ukraine on his list. He said no, don't believe those people.

I don't think that there is popular support here for that sort of move, whether within the elite, within the government, within the Kremlin. Well, Putin himself said no, that's not true. But he also said we reserve the right to protect, and we will always protect Russian people in Ukraine.

But then he also continued to deny today that there are Russian troops in Crimea that have been involved in anything that has happened so far. Still a lot of big military drills taking place on the Ukrainian border. So, I don't think the government in Kiev is going to be relaxing just yet, Richard.

QUEST: Phil Black, who is in Moscow doing late duty for us tonight. Phil, we thank you, as always.

It's not only Russia that is shrugging off the sanctions. That's pretty much the reaction of the financial markets, too. If you take a look at the markets, you -- bearing in mind what we've been talking about -- the Dow opened higher and it rose and rose and rose.

A few little blips on the way, but frankly, the saber-rattling has begun. The numbers tell another story. We'll talk about these numbers in a moment. QUEST MEANS BUSINESS, good evening.

(COMMERCIAL BREAK)

QUEST: Diplomats be expressing alarm at President Putin's speech, but stock markets rose in relief. Things were far -- weren't far worse. There were fears that violence might follow the referendum. Well, just go right in and have a look at that. That tells its own story.

From the Dow up a half a percent, the NASDAQ up at 1.25, Paris at 1 percent. And right down at the bottom, the Moscow MICEX index was up 4 percent. So, put all this together, you've got to question, shares across the board making strong gains during the course.

Investors hoping for bullish signs from the Fed, which is why the Dow and the NASDAQ were higher. Monetary policy meetings will be held this week and will announce a decision on Wednesday afternoon.

Let's talk more about why the markets -- let's leave those number in the wall for the moment. Joining me now, Evariste Lefeuvre from Natixis Markets.

As I look at those numbers, It's perverse. You're talking about a potential trade war, increasing sanctions between the two -- two of the largest of blocs, the EU and Russia, and you've got markets up at those sorts of levels. Why?

EVARISTE LEFEUVRE, CHIEF ECONOMIST, NATIXIS NORTH AMERICA: Why? Because I think you said it. For many market participants, it's over. So, there will not be any further escalation in those sanctions.

The stronger threats that was coming from Europe in terms of economic sanctions, far-reaching sanctions, as I said, will probably not be implemented, so the market is kind of relieved.

But what is more interesting, you have stock markets up, but what you see is interest rates are quite low, remain very low. So we have a mix of very risk-on, as we say, strong purchase of stock market. But at the same time, the bond market on the dollar, which is going up, also shows that you would have some kind of safe haven, which means fear --

(CROSSTALK)

QUEST: Right, but that --

LEFEUVRE: And that is weird today.

QUEST: Right. Now, that's interesting, because -- but it's never been an either/or. But it rarely becomes an each-way bet, which is what you're saying at the moment.

LEFEUVRE: Exactly. We usually have clearly either lower interest rates, stronger dollar but coming along with a lower stock market. And we don't have it today.

QUEST: No, but the reason, surely, you don't have it is because although everybody perceives stock market is the best game to be in, you want a bit of insurance in your back pocket in case it becomes a rainy day or gets nasty.

QUEST: That might be the case, but the other -- the fact you mention that the Fed is clearly meeting and that tomorrow we'll have the confirmation that they are continuing their policy. But probably also reduce the threshold that the interest rate, the unemployment rate below which they're going to act. This is probably providing some appetite for the bond market, especially in the US as well.

QUEST: But do you believe they will recalibrate that 6.5 percent and come up with another number? Or, as many market participants believe, that they will widen the range of qualitative data that they're looking at?

LEFEUVRE: I think they will do both, actually. They clearly want to stop with the 6.5 percent because they clearly mention it. And they will probably also extend on the qualitative side. But also very important for tomorrow is the fact they will probably provide us with some expectation forecast for next year and the year after, 2015 and 16.

And this will probably be positive for the bond market, because there will be positive but slightly pessimistic as well. So, no inflation, growth, the Fed, and no big risk of further sanction in Europe, this is good for the stock market.

QUEST: Briefly, I need you to do an Economics 101, Professor.

LEFEUVRE: Sure.

QUEST: The difference between qualitative and quantitative. What is -- why is something qualitative and something quantitative?

LEFEUVRE: I think it's a lot of marketing. It's trying to get away from the two numbers that the Fed gave a few months ago. That is 2 percent inflation and 6.5 unemployment.

QUEST: That's quantitative.

LEFEUVRE: That's quantitative. So, now, that's the -- qualitative is to say, our assessment -- that is, we don't know, but we think --

QUEST: Qualitative, feel it.

LEFEUVRE: Yes, feeling.

QUEST: It's a feeling.

LEFEUVRE: That's a feeling. And basically, this is a way of processing things that Yellen has given us. I think that.

QUEST: I think that we're very glad to have had you in this evening. Thank you very much, indeed.

LEFEUVRE: Thank you.

QUEST: Now, coming up on QUEST MEANS BUSINESS, I get the view of the New York state's comptroller on banking bonuses. Bonuses are up --

(RINGS BELL)

QUEST: -- and so is his blood pressure.

(COMMERCIAL BREAK)

QUEST: Europe's top banking regulator says the EU must not give banks a reprieve before bringing in bonus caps. The financial services commissioner, Michel Barnier, says bankers who sidestep planned restrictions on bonuses will face action. Barnier is trying to convince the European parliament to back the proposals. Some EU lawmakers are saying potential loopholes should be closed first.

Meanwhile, on this side of the Atlantic, employees on Wall Street are bringing home their biggest annual bonuses since before the financial crisis. Just look at these numbers. They're very large. The average bonus per person in New York's financial industry rose 15 percent to over $164,000 last year. And you can see how things have changed. They've gone up quite sharply, 15 percent.

In 2007, it was $177,000, and then it dropped quite sharply back. Earlier, I spoke to Thomas DiNapoli, the comptroller of the state of New York, and I asked him whether bonuses of this size were repellent or a fact of Wall Street.

(BEGIN VIDEOTAPE)

DINAPOLI: What we want to see -- and this is part of the purpose of the regulatory changes and reforms -- is that the business model be sustainable and profitable, not with the peaks and valleys that we've gone through.

QUEST: Right. But it -- well, on that matrix alone, is this sustainable, do you think, to have bonuses move back to the sort of levels they were is sustainable for the industry?

DINAPOLI: Well, I guess time will tell. It's certainly a higher bonus pool than we saw last year, although --

QUEST: Much.

DINAPOLI: -- interestingly, about 15 percent higher.

QUEST: Fifteen percent higher?

DINAPOLI: Higher. At the same time profits were down, by the way.

QUEST: That's even worse!

DINAPOLI: Yes, well --

QUEST: I maybe odd in the position of being able to make a comment on that, but you have profits down and bonuses up 15 percent.

DINAPOLI: Yes. Yes. Again, keep in mind that when this money is collected from a tax perspective, it helps us.

We estimate for New York City, it's an extra $100 million that had not been incorporated in the city's financial plan at a time where we have a new administration, they're hoping to do some exciting new initiatives. So, for New York state, for New York City, when this money is taxed, that's good news for everybody else.

QUEST: You really are in this uncomfortable position, aren't you? In the sense of whatever one might think of the grotesqueness of an industry paying these sort of numbers, from your professional point of view -- ding ding! Ding ding ding!

DINAPOLI: Yes. Yes.

QUEST: Keep bringing it in.

DINAPOLI: Yes. And that's the challenge for us in New York, isn't it? These jobs, if you can get them -- and there are fewer of them than there were at the start of the crisis back in 08. The industry's about 13 percent smaller in terms of head count. It's good work if you can get it, but not as many people have these jobs as had before.

QUEST: So, give me a feeling, if you will, for how big and significant the financial industry is to New York City.

DINAPOLI: Well, for New York City, it accounts for about 8.5 percent of the total revenues for the city. For the state, it's even larger because the state relies more on personal income tax revenue.

QUEST: So, it's 8 --

(CROSSTALK)

DINAPOLI: So --

QUEST: -- or it's 16.

DINAPOLI: -- it's 16 percent for the state.

QUEST: So, 8 percent -- 8.5 for the city.

DINAPOLI: Yes.

QUEST: And compare -- and what would be the next biggest one after that? Something like tourism or --

DINAPOLI: Well, of late, tourism has been a big driver, health care also.

QUEST: Right.

DINAPOLI: But it's very significant. And it has been for a long time. We want New York, with apologies to London, to continue to be the global capital of finance, and we want the industry located here. We need the jobs here. We just don't want to see the kind of risk-taking in the past that resulted in the collapse. That's what we want to avoid.

QUEST: But is there not an inherent contradiction in that between the sort of numbers you're talking about now, this 15 percent increase in bonuses, and reducing or avoiding risk-taking? The more risk, the higher the bonus. The higher the bonus, more risk. And I wonder, have we learned nothing from 2008?

DINAPOLI: Well, it's an interesting point, but I think part of why the bonus numbers are up this year is that we have seen changes in compensation since the financial crisis. So, part of this bonus pool this year happens to be deferred compensation, bonuses that were in deferred comp that now are being cashed in.

So, I don't think it's fair to just look at the numbers. They should say, well, this is -- they had a great year, they all made a lot of money. Some of this is from bonuses that were, in effect, given in 09, 10. So, there is a change compensation model, and that's part of why we have, I think, the uptick in the amount.

(END VIDEOTAPE)

QUEST: The search for the -- for plane MH370 now covers an area roughly the size of the continental United States. The pilots remain at the heart of the inquiry. We'll have the latest in a moment. This is QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There is more "Quest Means Business" in just a moment. This is CNN, and on this network the news always comes first. The Russian President Vladimir Putin has signed documents adopting Crimea into the Russian Federation. It had a formal approval by Russia's Parliament. In Crimea, one Ukrainian soldier is reported to have died and another was wounded when masked troops attacked the Ukrainian military base. Ukraine's foreign minister says Russia's actions could lead to war. Andrii Deshchytsya says he's concerned about the number of Russian troops deployed on Ukraine's borders. He was speaking to me on "Quest Means Business" and said the stability of the entire region's at risk.

(BEGIN VIDEOCLIP)

DESHCHYTSYA: This might create a real conflict that might lead to the war. So with that, there is possibility of all of us but certainly Ukraine that will be affected, but the original security, Europe and maybe the global security.

(END VIDEOCLIP)

QUEST: One of Russia's most wanted men has died according to a Chechen jihadist website. The Chechen warlord Doku Umarov had claimed responsibility for several bombings in Moscow. His death has not been independently confirmed. The search for Malaysia Airlines flight 370 has spread to an area of 7 and a 1/2 million kilometers. That's roughly the size of Australia. Malaysia's transport minister said his country could not possibly search for the plane on its own. We'll be live in Kuala Lumpur with the latest in just a moment.

So to the latest developments in the search for flight 370. The military in Thailand says it picked up radar data suggesting the plane turned to the west after that contact was lost. Now, that turn to the west, according to "The New York Times," says if it happened, was probably done by reprogramming the flight deck computer. The search for the pilot's computers and e-mails have found nothing to indicate a route change was preplanned according to U.S. officials briefed by Malaysian authorities. At the earlier hours it is half past 5 in the morning. Andrew Stevens is doing early duty for CNN in Kuala Lumpur. He joins me. Now, Andrew, in a nutshell, what, if anything, is the significance of both the "Times" report that the -- was preprogrammed and the Thai radar information that it headed west. Didn't we know this?

ANDREW STEVENS, ANCHOR AND CORRESPONDENT AND CO-HOST OF "CNN NEWSROOM, LIVE FROM HONG KONG": Yes we did, Richard. With the Thai radar, it's confirmation if you like. It's another level of confirmation that the plane did indeed turn to the west. It doesn't take us any further into where that plane may have gone. And with the preprogramming, that was addressed at the press conference yesterday by the head of Malaysia Airlines, who said that it was clear that the plane was programmed to fly from Kuala Lumpur to Beijing. But once you get into the cockpit and the pilots are in the cockpit, they can do anything they like as far as the programming is concerned. It doesn't advance us any way significantly, but what I think is significant today is we're getting reports out of the U.S. quoting officials in the U.S. who've been talking to Malaysian police here about the investigation into the pilots. And what we're hearing is that they've been reviewing the conversations between the pilots and the air traffic control, they've been looking at the PCs and other communication devices of the pilots and of course they've been looking at that flight simulator. And what they're hearing is nothing suspicious. No suspicious conversations, no suspicious information on PC, and most importantly, no suspicious data on this flight simulator. There wasn't anything to suggest that the pilot who had the flight simulator at home had programmed in or had been looking at any of the flight paths that that plane may have been on after it diverted. So, what does it say? It says that the clues to a hijacking, to a terrorist attack still just don't add up. It does say that -- and we know this because the governor's been saying -- it was deliberately diverted. The "The New York Times" piece would fit in with that. What it doesn't say though is why, and it comes back, as many people are saying, to what if a catastrophic mechanical failure rather than anything more nefarious than that?

QUEST: Andrew, in Malaysia give me a -- you've now been there for 11 days or so -- give me a gut feeling for how this is all playing out in Malaysia itself.

STEVENS: It's frustratingly slow here in Malaysia. The Malaysians have been faced with an enormous challenge and they found it very, very difficult to get a handle on this, on the investigation, on -- also getting so many other countries involved. The level of frustration doesn't run just to us, but obviously it runs to the passengers' families as well, Richard. And also to people on the street. They're asking questions as well. How -- people as me 'do you think the Malaysian authorities are doing a good job handling this?' It's been very, very difficult for them. There's been a lot of frustration for us. And as you know and as I know, a lot of the information actually comes from leads in Washington, D.C., not from the ground here. The information coming out of the Malaysian's has been very, very slow, it's been -- a lot of it has been turned around, turned on its head, it's been very difficult to pinpoint -

QUEST: Right.

STEVENS: -- with accuracy what they've been saying. So it has been - - it hasn't been -- they haven't certain haven't been seen as leading this effectively.

QUEST: Andrew Stevens' early morning in Kuala Lumpur. And we thank you. Now, in all of this discussion, we must never forget the 239 souls on board. At a press conference in China, there was an outpouring of anger from some friends and relatives of passengers on the jet.

(BEGIN VIDEOCLIP)

(YELLING)

QUEST: Quite understandable. They have been -- look at this -- attempting to get to the (inaudible). They've been without their loved ones now for 11 days and with virtually no information. They are frustrated at the lack of hard facts as Pauline Chiou explains from Beijing.

PAULINE CHIOU, ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL BASED IN HONG KONG: The latest news that the search area has expanded to 2.4 million square nautical miles is just so overwhelming and discouraging to the families here. One relative texted me and said "By now they should know where the plane is. They shouldn't be searching the entire ocean." Now earlier, emotions ran high once again at a news briefing between the relatives and airline representatives. One woman made this very passionate plea.

(BEGIN VIDEOCLIP)

Female, VIA TRANSLATOR: We only have one child. We're respectful Chinese people. It's hard to control your emotions when you might've lost your loved ones. We just need the truth. Don't use them as political pawns.

(END VIDEOCLIP)

CHIOU: We have to keep in mind that China has a one child policy, so many of these sons and daughters on the Malaysia Airlines flight were the only children in their families. Now, the Chinese government gave us an update today saying that they have researched the backgrounds of all 154 Chinese citizens on the plane and there is no evidence that any of them had any links to terrorism. Pauline Chiou, CNN Beijing.

QUEST: And this is "Quest Means Business," we're back in a moment.

(COMMERCIAL BREAK)

QUEST: Very glad you're watching us this evening. Wouldn't be the same if you weren't there, and maybe it wouldn't be the same if we weren't together at exactly the same time of the day. But there is a revolution that's underway in which we watch television, and Amazon is soon to launch its own video streaming device as soon as next month -- all this streaming -- according to the "Wall Street Journal." It's a direct challenge to another system called Roku. The Roku of course also is the number one apparently streaming device, offering things like Netflix, Hulu and the like. I asked Roku's chief executive Anthony Wood if he thought Amazon was a threat in a busy market.

(BEGIN VIDEOCLIP)

ANTHONY WOOD, CHIEF EXECUTIVE OFFICER, ROKU: We've been a leader in selling streaming players for six years now, and we've had product introductions from Google -- several versions of Google TV, Chromecast, several versions of Apple TV, so there's been a lot of competition in this space, and every year our usage has continued to grow. So last year we streamed 1.7 billion hours of content and that was up from a billion hours the year before. And that's because, you know, we're -- these are large companies but they're doing a lot of different things. We are focused just completely on the best streaming experience, the best value and the most content, and that has really allowed us to be successful and we think that formula is going to continue.

QUEST: Right, but there's a difference, is there, between the amount that you stream and if other people -- I mean to existing customers and new customers -- but if other devices come on the market, doesn't that hinder you? WOOD: When -- no, for example, last Christmas the Google Chromecast launched, our sales were up, revenues up 70 percent year over year. It's just a huge growing business, it's the way people are going to watch TV in the future and when these larger companies decide they want to try and enter this space, it increase -- it just shows how large the market is and how popular streaming has become.

QUEST: What's the defining point about streaming besides being able to watch what you want when you want it? Why is this now the absolute buzz for television?

WOOD: It's just the way to watch television. Consumers know that. They have choice, so they have more choice than they have on -- with a traditional cable subscriber, they can get their traditional pay TV they can get from companies like Netflix, they can get Hulu Plus. They have choices of how they want to pay for the content, they can get content that's supported by ads and is free, they can get content that's subscription that has no ads, they can pay on a transaction basis, on a subscription basis. And then of course, you know, I think that if you look at DVRs, that was a very popular device that has taken the first step in allowing customers to watch what they want when they want. But with streaming, it's really going to be everything ever made available on demand. So it's just really, the maximum amount of choice for customers.

(END VIDEOCLIP)

QUEST: Now, if streaming on television is one thing -- streaming video that is -- streaming of music has helped digital sales grow once again in 2013. All though around the world we spent nearly 4 percent less on recorded music last year. So is there a conundrum? How did we spend less but sales seem to be higher, and of course, the top five markets in Europe, France, Germany, Italy, the Netherlands and the U.K. all grew. So what's going on? Tell me about choices?

SAMUEL BURKE, BUSINESS CORRESPONDENT: It's just like streaming television like you just saw, but people are streaming music but they have two options. They can either pay for it and get rid of all the advertisements or they can listen for free and listen to it with ads and every company is trying to get in on the streaming music game.

QUEST: But this isn't particularly new. I'm trying to remember the first one of streaming music -

BURKE: You're probably going to think of Spotify, right?

QUEST: Spot -- that's it (RINGS BELL).

BURKE: Let me ring the bell.

QUEST: No, no, you're not touching the bell.

BURKE: The reason why, because Spotify, Richard, is still the one to beat. All of these they have a diverse option that you can do it on tablets, you can do it on phones on television even. They have the free service, they have the one that's paid for, and of all of the services out there it's the one that's available the most countries. Spotify still the one to beat.

(CROSS TALK)

QUEST: You're too young to ring that bell, young chap.

BURKE: But they're not the only ones trying to get into the market, Richard.

QUEST: All right, who?

BURKE: Everybody else -- Google. Google's getting in. They have a service called Google Play Musical Access. Horrible name, great service. Ten bucks a month for unlimited songs, you can even download them to your phone even though you can't keep them on your phone forever. You have Apple's who's gotten into the game. They have a streaming service and people say the reason that Amazon Prime went up in that price per month is because they might have their own music service soon.

QUEST: All these streaming services require you to be online or at least have a connection, don't they?

BURKE: Now that's even starting to change a little bit. For the most part, you're right, but Google Play Musical Access and Spotify too -

QUEST: Right.

BURKE: They let you keep songs even when you're on the subway, when you don't have a connection. They allow you to keep a certain amount of songs on your device.

QUEST: And do the artists who are normally the first ones to be up in arms at any (inaudible), what do the artists say about all these music streaming services?

BURKE: Well, people want to get involved because they want to stay cool. So you have the Lady Gaga playlist on a lot of these services. The Dr. Dre playlist. But at the end of the day, subscription to these services -- streaming services -- up 51 percent but global sales down 4 percent overall. So they feel the heat. What is that thing?

QUEST: I beg your pardon?

BURKE: Apparently that's down to about 11 percent sales of whatever that's called.

QUEST: It is. What about those headphones? They look very modern to me.

BURKE: Oh, yes? Too modern?

QUEST: Jeez. Right.

BURKE: It's streaming.

QUEST: Jenny Harrison is at the World Weather Center. Thankfully Ms. Harrison is -- Jenny, I need you to -

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: What is this?

QUEST: -- to join -- I -- what are you talking about?

HARRISON: (LAUGHTER) (Inaudible).

QUEST: Streaming, streaming.

HARRISON: Streaming. Yes, streaming. What about the rain screaming down the window pane?

QUEST: Yes -- very good, very good. Yes. Yes.

(LAUGHTER)

HARRISON: OK, let me move swiftly on. I'm going to talk about actually some strong winds, winds that should be pretty -- well -- bringing a good turnabout of events across into Paris certainly. Now, the wind had been picking up along with the rain in the last few hours, but of course I'm referring to this because the pollution which has been very much out there for the last several days -- let me just get out of the way and you can see. The picture on the right obviously is with the pollution, the picture on the left is how you'd like to always see the Eiffel Tower. They've made some pretty good -- they have some good ideas and made some pretty good changes over the last few days -- free public transportation, certain cars could use the roads on certain days. And it's all beginning to work, but I have to say I think the weather's probably going to bring about the best change of all. So, moderate level here in terms of pollutions in the air. So for the pollution, and then if you compare it to Beijing, you can see that Beijing is still worse. But, as I say, nobody wants to be worse, certainly, than Beijing as we know from experience. This is why things have been changing. Windy conditions with the system coming through from the north, but the bulk of Europe is fine, it's dry. Temperatures actually quite above the average. The winds will eventually push into Paris. There we go -- getting to around 60 kilometers an hour, but at times some very strong winds across the far northwest so just be aware of that if you're taking to the skies and traveling from some of the major airports. Still warm again this Tuesday. Temperatures above the average. We had 14 in London, 25 in Madrid with an average of 16. And it will be warm again for the next couple of days, and eventually that -- really warmer -- pushing into Berlin. Look at this -- Thursday and Friday 20 Celsius. And the average for this time of year is actually just 8 degrees. There is some rain coming through across the north, a mix of snow in there as well. But for the most part, really, the bulk of Europe is going to be seeing some good, clear skies and also some pretty good temperatures. Here we go -- Wednesday 17 in Paris and 18 in London. And just very quickly, cosmic inflation. Is that a term I wonder if Mr. Quest is familiar with. It's actually all about cosmology. This is what I want to talk to you about now. This is an amazing image, this is obviously from the South Pole. It's all about this particular telescope. It's taken the scientists four years to build this. And on Monday, they came out with the information. Look at this -- incredible how they've been able to use - - . By the way, reason they're in the South Pole is because the conditions there are so very, very dry and crisp and clear, and so they were able to get these amazing images. Let's just roll the video and you can see what I mean, what they're -- is all about. It's actually all about the big bang theory. It's taken them four years to build the telescope, three years to analyze the data, and what they're saying is that they actually now have evidence of the big bang theory. They can actually pinpoint small ripples from gravitational waves. All of that is an indication of actually how our planet or the universe came into being. It all happened in a trillionth of a second, Richard. Everything expanded and inflated and that is the universe as we know it now which of course continues to grow day by day or hour/hour, week by week (inaudible).

QUEST: Jenny, that was interesting. Thank you. Thank you for that. Jenny Harrison at the World Weather Center -- the South Pole with inflation. Now, coming up in just a moment on "Quest Means Business," we've been speaking to someone who was close to the fashion designer L'Wren Scott. (Jo Wood) talks about her friend and Scott's relationship with Mick Jagger. Back in a moment.

(COMMERCIAL BREAK)

QUEST: It's just been confirmed that the Rolling Stones have canceled their tour in Australia after the death of Mick Jagger's girlfriend L'Wren Scott. Before the fashion designer died, Scott was facing mounting debts and losses in her fashion business. Annual accounts show that the business was in debt to nearly $8 million by the end of 2012. Unless fashion was burning through cash at a rapid rate, its reserves had dwindled by more than 90 percent in one year. It was less than $100,000. Jo Wood is the ex-wife of Rolling Stones guitarist Ronnie Wood and was a friend of L'Wren Scott. She spoke to Nina dos Santos in an exclusive interview.

(BEGIN VIDEOCLIP)

JO WOOD, EX-WIFE OF RONNIE WOOD: She was like a statuesque, floating around, elegant woman. Very hard to get close to, but at the same time she would always be really lovely to you. I can't believe that she -- that she would -- took her life. I think it's very, very sad. My heart really goes out to Mick.

NINA DOS SANTOS, NEWS ANCHOR AND CORRESPONDENT BASED IN LONDON FOR CNN INTERNATIONAL: How has he been coping? You've obviously been speaking with your ex-husband Ronnie who's on tour with him at the moment.

WOOD: He's devastated. He's absolutely devastated. I think it must be a real, real shock for him.

DOS SANTOS: What do you think happened? Had there been any indication of whether it's depression, financial troubles -- there's been talk about financial troubles with her design company.

WOOD: Well, maybe. That might -- I think if anything that the financial thing might've been the trigger for her because she was such a proud woman that I think to have to face that -- maybe that was the, you know, the trigger. I don't actually know. I'm surprised as much as everybody else.

DOS SANTOS: How is Mick Jagger these days and how was his relationship with her?

WOOD: I think they had a great relationship. They were together 13 years. I think if -- you wouldn't have a good relationship and stay with somebody for 13 years if it's not good.

DOS SANTOS: Nevertheless, you obviously lived through many of his tumultuous relationships. Bore many children, there were affairs. Talk to me about those times and also Mick Jagger's -- the man as well behind those relationships.

WOOD: Well, for Mick, he has been -- you can say it literally -- a sense of stage for all his life. And I think he's always had the adoration of women. He's a lead singer and they always have that reputation. But you know, I am friends with Jerry, his ex. That's part of the job, isn't it? That's why the women still throw nickers at him now. You know, he's that sex symbol up there, even at 70. It's amazing.

DOS SANTOS: What was it like being the other half of Mick Jagger for those people? Because as you said you're still good friends with a number of his ex-wives and ex-partners today. Mick is the most charming, charming man, and I think even if you are an ex- of Mick's he will always treat you well and he will always -- he has that charisma, he has that charm. And I think that's what -- most of the women he's been out with he's friends with still.

(END VIDEOCLIP)

QUEST: Tonight's "Profitable Moment." Russia may have annexed Ukraine's Crimea province in the words of the West, but look at these numbers on the markets -- the Dow up 1 percent, Moscow up 4 percent. All the markets showing strong, green gains. What does it tell us? As you heard on this program tonight, the foreign minister of Ukraine may describe it as a diplomatic war and maybe more, but investors think this one's all over bother shouting. And maybe that's a rather troubling view, but if you follow the markets, the markets say this one's not going much further. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you tomorrow.

END