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Quest Means Business

BA Chairman Calls Some Airport Security Completely Redundant; Reining in the Real

Aired October 27, 2010 - 14:00   ET

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

RICHARD QUEST, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: He who dares: BA chairman calls some airport security completely redundant.

Victory, but at what price? Sarkozy's pension reform leaves him scrambling for public support.

And fighting the currency war. Brazil's central bank governor on where we go from here.

I'm Richard Quest. I mean business.

Good evening.

It is a truth that dare not speak its name. Since September 11 airlines security has been seemingly sacred. And today BA chairman Martin Broughton's comments broke a golden rule. Is he right? Tonight we'll have reaction from passengers from the industry and from both sides of the Atlantic. But what did he say that caused such a fuss. The chairman Martin Broughton said some of the security checks required for airline passengers are, in his words, completely redundant.

And British carriers should stop cow-towing to American security demands, such as taking off shoes and unpacking laptops. At the U.K. Airport Operators Conference in London, Bratton criticized the United States for double standards. He said, "America does not do internally a lot of the things they demand that we do. We shouldn't stand for that. We should say we'll only do things which we consider to be essential and that you Americans also consider essential."

Not surprisingly, U.S. Transportation Security Administration, which sets the rules says, "We work closely with our international partners to ensure the best possible security. We constantly review and evolve our security measures based on the latest intelligence."

A row, indeed, is now underway. Here in the U.K., the minister of transport, Theresa Villiers, says all the current measures are needed to keep passengers safe.

(BEGIN VIDEO CLIP)

THERESA VILLIERS, MINISTER OF STATE FOR TRANSPORTATION: There are no measures that we have in place at U.K. airports which we don't feel are necessary to deal with the degree of security risk associated with flying. There is undoubtedly a security risk in relation to flying. There is- experience shows us that that is the case and the security information to which I'm as minister demonstrates that that is the case.

But we keep these arrangements under constant review to ensure that we keep them up to date and we won't hesitate to remove security procedures which we are confident are no long necessary for keeping passengers secure.

For example, we are looking with great care at the restrictions on liquids to see if there are technological developments which will ultimately enable us to lift those restrictions. They are not on stream yet, but within the next few years we hope we may be able to make changes to the restrictions on liquids. That is the kind of process that we look at across the board on security arrangement so that we ensure that we keep passengers secure but we try to minimize the hassle associated with security checks and arrangements.

(END VIDEO CLIP)

QUEST: Britain's aviation minister. CNN's Ayesha Durgahee has been finding out what air passengers make of security checks. She joins me now, live, besides Heathrow's runway in London.

Ayesha, I think I can pretty much already know that they are seemingly furious. They believe it is an irritant. But Ayesha, they also must accept it is necessary?

AYESHA DURGAHEE, CNN CORRESPONDENT: It is true, Richard. Passengers who have been arriving at airports for a long time have been bracing themselves for the security measures that they'll have to endure before their trip can really begin. The thorough security checks have been put in place in response to terrorist activities. They have become the bane of the travel experience.

And for the passengers that we have been speaking to, they have been waiting to board a flight out of Heathrow behind me, they say that even though the security checks are tedious, there needs to be more consistency when safety (INAUDIBLE).

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Security should indeed be uniform across the board. Because, I think, obviously, with the United States seemingly not carrying out the entire checks that they expect everyone else to carry out. So, I do think it is important that taking off your shoes, whatever it is, that every one complies with what they expect everyone else to do.

UNIDENTIFIED MALE: I want to feel safe, basically, so all the measures that are in place now I think are a good thing. Because when you travel you want to feel safe, don't you?

(END VIDEO CLIP)

DURGAHEE: And consistency was one of the issues highlighted in Martin Broughton's speech, that there is a need for international standards, when passengers are traveling from airport to airport, that they are not confused about what to take out, what to (INAUDIBLE).

But his comments are a wake up call and one that is welcomed by airlines, airports and passengers, alike. And the fact that someone from within the industry has spoken out can only mean a good thing. And hopefully we'll see some progress fairly soon.

QUEST: All right, Ayesha. Ayesha, come on.

Ayesha, you know, because you cover this industry and I know, because I cover this industry, that what Martin Broughton said, everybody will say to you privately. That a lot of what was discussed, or a lot of the measures, don't make sense.

DURGAHEE: Well, for Martin Broughton, what he said it is almost as if what he said was what the rest of the industry was thinking. And that he has actually waived a flag and said, hang on a minute, with flights going out to the U.S., with so much irregularity in-from the airports that people travel from, in terms of how confusing rules are and what to take on board and what they can leave in their bags. I think it will take time. It will take time before it is really clear what will actually be done.

QUEST: Ayesha, standing next to I think it is 27, right? Doing the best she can with those planes going overhead.

Go and take some numbers down and we'll do some plane spotting later, which of course, I won as you remember. Ayesha Durgahee-

DURGAHEE: I'm plane spotting all day.

QUEST: Now we know. Ayesha Durgahee at Heathrow Airport.

BAA which, of course, owns Heathrow Airport and to some extent is ground zero in this debate over security that Martin Broughton was talking about. BAA operates six airports, including Heathrow. And today it also announced losses, which have now passed 70 percent. Record passenger numbers helped cut its nine-month loss to $303 million. It had made $1.2 billion loss for the same period last year. Extensive passenger security checks put a strain on the airports. And I asked BAA chief executive Colin Matthews if the current measures are more officious than efficient.

COLIN MATTHEWS, CEO, BAA: Well, listen, what everyone knows and understands is the first priority is to make sure that passengers are safe. That is not an optional, we have to do that. Second thing I think, I hope people understand that it is governments who set what the security requirements are. But I think we can have a constructive voice. The industry should have a constructive voice in saying how we do it so that it has got the best and most comfortable arrangements that we can from the point of view of passenger service.

So if we can start from a blank sheet of paper and pull together a single coherent process, instead of what we have today, which is one requirement, led on top of another, then I think we can do a better job for passengers.

QUEST: So, uh, I-I-let's put safety on the table. Everyone agrees that that is the first, foremost, and only criteria. But once we have all agreed on that, do you agree with Mr. Broughton?

MATTHEWS: What I agree is we could do it better for passengers. What we do today is incremental, is one requirement laid on top of another, one issue, one terrorists attack and as a consequence a new requirement. And we need to start with a blank sheet of paper, and design it coherently, from the start. And those discussions have started, actually, with government, and I am reasonably optimistic that we can make progress.

Of course, we'd love to do it all, change it all tomorrow. But it is going to take a little time, but yes we can do a better job.

QUEST: So your message is change is coming, but not just yet.

MATTHEWS: Yes. And that discussion has started. And we can have a positive role around the table, saying not just what do we want to achieve, but how do we make it happen in a way that is comfortable?

QUEST: Let's look at your results now, if we may? They are an interesting set of results aren't they? They (UNINTELLIGIBLE) interesting in parts, because they tell us a lot about what is happening in economies.

MATTHEWS: I think it is good news for the economy for two very good reasons. One is the growth in business travel. You know, Heathrow's job is to connect U.K. business to global markets. Some global markets are growing strongly. It is really important that our economy is out there taking part in that growth. So that business travel grow is, I think, in current (ph) obviously good news for the airport. Very good news for the airlines, our customers, and good news for the economy.

QUEST: But the fly in the ointment is we are in an austerity slowdown in the U.K., and of course in other major markets, for example, the United States which will have its own cutbacks in due course.

MATTHEWS: Well, it is true that leisure travel is not as strong as business travel. But in our case, and the results we are announcing today clearly Heathrow is the biggest driver of those. And we like that. There is a second very good news economically, you know, every bit of EBITDA we generate, 690 million pounds in nine months. Practically every pound of that reinvested in the airport to make the airport better. We want to make it better for customers and we are pleased to be able to do so.

QUEST: Without a third runway, and even though with your expansion program in place is it inevitable that Heathrow looses its premier spot, be it to a Frankfurt, a Paris, within Europe.

MATTHEWS: Over time, without doubt, destinations will move to those other airports. But that issue has been settled for a period of time. We are focused on improving customer service today, and we can make progress. We are better today than we were a year ago. We really want to make sure that improvement continues in the current year. And I believe we can.

(END VIDEOTAPE)

QUEST: That is the chief executive of BAA, Colin Matthews.

And, of course, I was Tweeting about this earlier today at RichardQuest, on what is the most annoying-the most annoying that you find of the security requirements. At RichardQuest, you can join in on that.

In a moment French President Sarkozy is getting the pension reform he championed, but at what price? We'll be taking a look at the question after the break.

(COMMERCIAL BREAK)

QUEST: The Lower House of the French parliament today approved that controversial reform bill. The last legislative hurdle before the measure is signed into law. For President Sarkozy the victory, it might be economic necessity, but it has come at a great political cost. Now, the latest polls reveal his approval rating has fallen to just 29 percent. The lowest since he took office more than three years ago. That is pretty desperate for a president that was so popular when he arrived. He is struggling with a budget deficit of 7.7 percent. And it was the measures he is taking and the facing the planned strike action against that pension reform that perhaps draws the line between nationwide strikes, deficits, and that low approval renting.

The honeymoon period seems to be coming to an end for David Cameron in the U.K. Now his net approval rating is minus 2, from a plus of 14 when he came to power. Cameron's budget deficit, in this case, 13.3 percent of GDP. And his problem will be how the public reacts to the budget cuts. Remember last week the austerity measures were announced but they won't come into force until next year.

So who has got the most to worry about, today? The U.S. President Barack Obama; just 27 percent of Americans strongly approve of the way he's performing, against 45 percent who strongly disapprove. So all in all it gives a rating of minus 18 in the latest poll. His budget deficit, 10.7 percent. And the reason why he's the most relevant, the midterm elections, which take place next week.

If you put all this in one context, let's take a look at Mr. Obama's standing with the U.S. electorate. Dan Lothian is in Washington tonight.

(BEGIN VIDEOTAPE)

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: It is not the kind of news that a president wants to wake up and read every morning. But that is exactly what President Obama has been doing in recent months, low approval ratings. The most recent numbers placing it at 47 percent. Just last month CNN had it as low as 42 percent.

Now how does this compare to past presidents? Well, Mr. Obama is either right at, or better than former President Bill Clinton, Jimmy Carter and Ronald Reagan. This White House realizes that a lot of Americans are just frustrated at the pace of the economic recovery. Mr. Obama made a lot of promises when he came into office; injected a lot of money when he came into the economy and with the stimulus plan. But a lot of Republicans have been very critical, that it is only hurting the economy. So, Mr. Obama is paying a high price in the polls.

(END VIDEOTAPE)

QUEST: So, it is Britain it is the U.S. it is France, and in Germany, too. Well, Angela Merkel spoke out boldly at the Bundestag today, reiterating her determination that the Lisbon Treaty must not be changed to protect EU members from financial failings. She is fighting for force (ph) of reforms, but voters don't seem to be appreciating Merkel's efforts. Her popularity is at a record low. Diana Magnay is in Berlin.

(BEGIN VIDEO CLIP)

DIANA MAGNAY, CNN CORRESPONDENT (On camera): I'm Diana Magnay, in Berlin.

Now the German economy is going from strength to strength. Unemployment is falling, and yet if you look at the government's approval ratings you wouldn't really think so. They have fallen to their lowest since the coalition signed its treaty, this time a year ago. Really, because of an inability to find any kind of consensus on a series of issues within the ruling coalition.

There is also a sense among the electorate that the economic growth that Germany has been seeing has nothing to do with the government's initiative, rather a pick up in global demand for Germany's exports.

(END VIDEO CLIP)

QUEST: Diana Magnay, there, in Berlin.

So, as you can tell, and will following the future, the way in which the leaders are all in somewhat-somewhat trouble.

Next a red or a green for the Q25. And we'll be talking to the co- chief exec of SAP, one of the Q25, and ask him if he's happy with our tough love assessment, when you hear what it is in just a moment.

(COMMERCIAL BREAK)

QUEST: Welcome back.

It is down to the wire in our Q25, the exclusive index that helps you make sense of the earnings season and the trends. And to pass our Q25 this time around, excuse me, and get that green balloon, you must pass a more rigorous test than in the past. So far in the season our green balloons are outnumbering the red ones by a very-three balloon margin. Which seems to be just what you might expect, certain companies are doing better, but not really; the bar is higher, earnings are still strong enough to get the passing grade. We have six more to hand over, over the next two days.

Maggie Lake is in New York.

Good evening to you. Excuse me, Maggie, a bit chesty.

Let's begin with Conoco Phillips. If we look at a strict reading of the rules, under our new tough love, it got three out of five, three out of five.

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: It did.

QUEST: Which means we had a debate.

LAKE: We did. We did. And the numbers look really good. And those are the three criteria they have to hit. The profit, the revenue, both year over year and quarter over quarter look good. Where we were a little murky were the last two, which I think has more to do with the future. Raising guidance? They didn't. They didn't lower it. They just didn't say anything and higher and R&D we kind of gained them this one, because oil companies, as you know, are always doing that exploration and sort of investing in new projects.

But again, they are holding their cards pretty close to their chest. But, Richard, a lot of the analysts were saying, listen, you know, energy prices are recovering, demand is going up, there is an improving story line here.

QUEST: All right.

LAKE: So, in the end I think we decided a green, even though it was a little bit grudging.

QUEST: We have a double G. Grudging green, for-

LAKE: That's right.

QUEST: For Conoco Phillips, but it does show a trend and it does sort of make the point.

When we come to talk about Whirlpool, there was no debate on Whirlpool was there? There was absolutely nothing that one could enjoy about their results-at least not that I could see.

LAKE: Well, there was a small bright spot, it just doesn't-it isn't able to register. They got black marks, look, no, no, no, across the board for all of our criteria. The only thing I'll say is that they are doing well in emerging markets, which everyone is, right?

QUEST: Ah, ah.

LAKE: But their sales look good in Asia and Latin America. But that did not-that did not even come close to offsetting the dismal performance in Europe and North America, it is still their biggest market. And listen, you know, the economy is tough.

QUEST: Right.

LAKE: People are not buying those fridges and washers and that sort of stuff.

QUEST: Our next one is SAP. Now, with SAP we have the chief exec on this program, after the break. So we had to have it be a really strong debate about this. Because it was a three-five.

And, Maggie, you know, why have we decided that SAP, even though it seems to have good numbers, and it had Q-on-Q impressive details and revenue growth, why are we giving it a red?

LAKE: Yes, this was a tough one. And their numbers were good looking their outlook seemed to be cautious. I mean, they just-they didn't raise their guidance. And the problem is in this environment their competitors are a lot more upbeat. We heard good things from IBM. They raised their forecast, although not as high as some analysts had hoped, but still, they raised their numbers.

Oracle had good things to say back in September, so when you contrast it to your peers and you have to, that is who you are competing against, the fact that SAP didn't want to budge and they seemed to be a little cautious , is a real concern. It concerned analysts, it concerned me. We didn't hear anything about hiring or expansion, as well, so those are future indicators. And I'm afraid they just didn't measure up.

QUEST: Maggie, many thanks. We have given SAP a red balloon. Maggie is in New York.

And she mentioned, investors hoping that SAP would follow U.S. rival Oracle and report much better than expected earnings. We're sorely disappointed. We gave SAP a red balloon. Investors seem to agree. The shares slumped more than 2 percent this Wednesday. And now joined-nearly 3 percent-the co-chair of SAP, Bill McDermott joins me.

And unusual position that we find our selves in. We have awarded a red balloon to your company, but now I suspect you are going to tell me why we are erroneous in our decision.

BILL MCDERMOTT, CO-CEO, SAP: Well, Richard, you are a smart guy. And I believe you could change your mind if the facts substantiate the need for change. So, let's net it out here.

The company didn't miss anything. We grew 20 plus, percent, software and software related services across the world. In the BRIC countries we grew more than 40 percent, year over year, across the world.

QUEST: So-

MCDERMOTT: We expanded our margin and reported revenues 1.7 percentage points. And once again affirmed our leadership role in the business software industry.

QUEST: All right.

MCDERMOTT: If you want to hold it against us that we didn't raise guidance, that is red. But we made our guidance and we reaffirmed our guidance, and we kept our promise every quarter, quarter in and quarter out.

QUEST: Bill, but at the same time when you have other companies raising guidance, again and again. And you have other companies who are delivering those numbers, you can see the market didn't like it. You were down 2.33 percent.

MCDERMOTT: Yeah, but you have to remember, too, we were up 25 percent since February 8. So, there was a bit of a run up. And, yes, I know people wanted us to raise our guidance, but we do a lot of business in the fourth quarter. We kept our promise every quarter and we intend to keep our promise again. So let's keep our promise, get the job done once again and not do the talking by raising guidance, but deliver the promise. That is what we are going to do.

QUEST: Let's talk about the lawsuit, briefly.

MCDERMOTT: Sure.

QUEST: I know it is virtually on top of you. You can't talk too much about it. But the name-calling started, the mud is starting to get thrown about. How much is it going cost you this lawsuit, in the end, do you think, to get out of it?

MCDERMOTT: Well, let's put it in context. SAP had a very small subsidiary, $10 million in size; we admitted that this subsidiary made some mistakes on downloading information. We actually rectified that by closing this subsidiary down.

QUEST: Right.

MCDERMOTT: And we are prepared to be accountable for some remuneration based on the subsidiary's actions. But we expect this to be reasonable. And frankly, it is odd that something like this should even be going to a court. So, we will deal with this in the due process of the court system starting on Monday.

QUEST: OK, final question. The whole area between SAP, Oracle, IBM, the way that that-HP-the whole senior management has got messy. As you have all swapped jobs, you are slinging mud at each other. Bill, tonight, are you prepared to say, on this program, enough is enough, it is time at least play nice?

MCDERMOTT: Oh, absolutely. I don't think it is a matter of playing nice. I think this is a matter of having class, and having elegance. So there are two distinct choices. One choice is there are consolidators of the past, companies that are doing M&A, doing roll ups on hardware and software saying, I want to lock you in, customer, and own all of your spend.

We choose not to go that way. We believe we have to innovate the future. So whether the customer wants to run things on the premise, in the cloud, or on device, we'll orchestrate at the data process and security layer, so the customer can consume the innovation, fast, with real return for their shareholders, so they grow their business. That is what we will do as the trusted innovator in this industry.

And SAP has never participated in mug slinging, because we are too focused on our customer to worry about the sideshow that you see coming out of California.

(LAUGHTER)

QUEST: Bill, many thanks indeed. Who knows, next quarter, come back. The balloons will be here. And we'll be back again, Bill. Go on.

MCDERMOTT: Thank you, Richard.

QUEST: Good to see you. Bill McDermott, joining me from New York.

The Brazilian real is nicknamed the loonie. It's now dancing to its own tune. We will hear from the president of the Brazilian Central Bank.

This is QUEST MEANS BUSINESS and a lively one at that.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN. And here, the news always comes first.

Indonesia tonight reeling from a double punch of natural disaster. The death toll is rising each hour from the earthquake and the tsunami off Sumatra, which has now killed at least 311 people. More than 400 are missing. Rescuers and aide workers are scrambling to reach hard hit areas, but rough seas and debris are making it tough going. Local hospitals are said to be overwhelmed.

A new audio recording said to be the al Qaeda leader, Osama bin Laden, has a threatening message. The speaker is warning France to withdraw its troops from at -- from Afghanistan and refers to French legislation banning full head scarves in public. The words it says: "As you kill, you will be killed." The tape has been broadcast on the Al Jazeera network on Wednesday.

Flags are at half mast in Argentina following the death of the former president, Nestor Kirchner, who died of a heart attack today at his summer residence. Mr. Kirchner was the husband of the current Argentinean president, Cristina Fernandez. (INAUDIBLE) Kirchner was (INAUDIBLE) send their condolences. Kirchner was widely expected to run for president again in 2011, when his wife's term of office is over.

Now, tonight, reports that the expected stimulus by the U.S. Federal Reserve to print money will be less than expected, and the news has weighed on Wall Street and triggered a rally in the dollar. It's this kind of currency volatility that has an impact on emergency economy -- emerging economies -- I beg your pardon -- like Brazil's. The recent weakness of the dollar had pushed its currency, the real, higher. And that boosted the price of its exports exactly a month ago.

Look at the chart here. A moment ago, the Brazilian finance minister, Guido Mantega, was the first to talk of a global currency war. He said it has broken out. He fired the first shot. He implemented taxes that would curtail the currency's rise by basically taxing foreign investors in Brazilian bonds.

Now, the central bank president is vowing to protect his country's economy. As you can look, despite those comments, the real continued to rise, although there was a short period of coming back off the top.

Felicia Taylor interviewed him and joins me now from New York -- how worried, Felicia, are they?

They know they used this phrase currency war that we've all jumped on.

But are they satisfied that it's a skirmish, not a war?

FELICIA TAYLOR, CNN CORRESPONDENT: No, not at all. I mean they're actually very worried about it. That's why they've been so vocal. I mean, as you're pointing out, the real has seen a two year rally with somewhat of a -- a 30 percent rise. And, of course, that hurts their exports.

But, you know, Brazil is a country that has this sort of confluence of problems, not all of which are bad to have. They have low unemployment. They don't -- they're not really concerned about inflation yet. It's not off the radar, but not just yet. They've obviously got strong growth and they've got these continued capital inflows into the country. But it's just that, the continued capital inflows, that are part of the problem. And they've done something, which is taxing the foreign investment bonds, already.

So I began by asking the Brazilian central president, Henrique Meirelles, what else they can do to stem that tide, control the currency and pre--- and prevent an increase in inflation.

(BEGIN VIDEOTAPE)

HENRIQUE MEIRELLES, BRAZILIAN CENTRAL BANK PRESIDENT: On one hand, the U.S. is adopting monetary expansion and is apparently going further in the sense that markets are pricing up. And if that is done, together with the fact that China has pegged currency to the dollar, amongst with other countries, we have important currencies coming down. The euro is not able to absorb all the opposition (ph) that we would normally because of the problems that Europe is facing.

As a result of that, there is an overflow of funds to smaller economies, particularly economies like Brazil, which is growing at a higher rate. We have to reach an agreement.

Meanwhile, we take measures to protect our economy.

TAYLOR: One of those measures that you did take recently was by imposing a tax on foreign investment on certain bonds in Brazil. That's a fairly aggressive tactic to take.

If there continue to be these kinds of currency distortions, what are you able to do to rein in that kind of liquidity in Brazil?

MEIRELLES: Well, we are acquiring the excessive liquidity, building up reserves and we are sterilizing the local currency, which comes as a result of the dollar acquisition by the central bank. In addition to that, we are strengthening the credential rules for the financial system in order to stop the financial system to fuel that excessive liquidity into the market and to create bubbles and the kind of asset price distortions that occurred in other economies. And so, we are taking several measures in a coordinated way to protect the economy of these effects.

TAYLOR: But specifically, one of the major things and topics, obviously, is quantitative easing coming up next week. We're at the -- at the door of this happening.

MEIRELLES: Yes.

TAYLOR: There's much discussion and debate about whether it should be happening or not and whether it's too much if they take another trillion dollars into the marketplace.

If we see that come from the Federal Reserve in this country, how does Brazil respond?

MEIRELLES: Well, as I said, I think the market has already priced some of that. If it's more than the market price, then we will have another inflow. But again, we are responding to that. We have taken our measures and it's not ideal. It creates other kinds of distortions.

But what can we do?

The fact is that we have to protect the balancing of our economy and avoid distortions.

(END VIDEO TAPE)

TAYLOR: So it's exactly that balancing act that they're trying to -- to figure out how to manage.

Now, we're hearing today that -- and, of course, that's what's hitting the stock market and pushing the dollar higher -- that perhaps they're not going to do as much, meaning the Federal Reserve, when it comes to quantitative easing -- a couple hundred billion dollars as opposed to a trillion -- a significant difference. And it's making a difference with regards to the currency so far, the dollar.

QUEST: As we talk during the week, you and I will talk more about this. I've seen some numbers that suggest they'd have to go for $2 trillion or $3 trillion or $4 trillion to actually make a difference.

But Felicia, we need to put that on the back burner.

Aha, you thought you were going to get one in there. Nope. Not tonight, Josephine.

(LAUGHTER)

QUEST: Felicia Taylor is in New York.

When we come back in a moment, we'll update you on those markets and my own travel experiences with security.

QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: The worries about what may happen with quantitative easing and earnings and mid-terms and Congressional gridlock -- look, you can take any one of a number of reasons, but that's the reason that you only need to see now.

Oooh, we're off the -- the bottom. We were more than 130 down at one point. But the market is pulling back just a touch or so, now just about 100 points, 11071. I'm not a betting man on the market, you know what. But I think we'll hold 11000 before the end of the session.

It's going to be a very rocky couple of sessions as we head toward next week, those mid-terms and the Fed meeting at the same time with a possible Q.E. announcement.

The weather forecast where you are and the conditions.

Guillermo Adruino is at the CNN World Weather Center.

I was in Florence the last couple of days, in Italy.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes?

QUEST: I was expecting -- oh, I mean it was horrible. It was -- it was overcast.

ARDUINO: I know.

QUEST: But it was quite beautiful. Look, Florence was delightful, but the weather.

ARDUINO: Yes, bad luck, bad luck, because we had some storms there that are still lingering, you see especially in the south. And they are moving into the Balkan Peninsula here for Greece and Turkey and the Aegean Sea. This looks awful. So if you are in Cyprus or now, crews here in the East med, it's not looking nice at all.

London, on the other side -- on the other hand, it's going to be OK for the next two days. Come the weekend, the rain will be there, unfortunately. And we have some problems at airports. But Europe in general looks OK. The southern parts of Germany quite cold. Then snow in Scandinavia and these are the issues at airports -- Amsterdam with some windy conditions, Dublin, London, you know, Copenhagen.

So apart from the winds in London, I think it's going to look fine. Rome still seeing some winds in the south really bad.

So that's one thing. Now, Okinawa bracing for a major typhoon here imminently. Now, the winds are going to affect Taiwan, as well. You see this is in the next two days, Richard.

So, OK, now what?

They are very close to it, very strong winds; also, a lot of rain. Hong Kong is seeing some of that wind, too, but especially Taipei is where we see most of it. You see, even though the cyclone will be in here, you see how the winds encompass practically the entire area, unfortunately.

So the cyclone is going to continue its general direction toward Japan. Probably in three days we'll have it over Tokyo and a tropical storm, this is moving extremely quickly. So Japan is not going to have a problem, but Okinawa, it's going to be bad -- Richard.

QUEST: Many thanks, Guillermo, at the World Weather Center.

ARDUINO: Thank you.

QUEST: Thank you. Good weather, please, for the weekend.

Now, tomorrow on this program, these three letters -- or two letters - - Q&A -- the ones you know. Ali Velshi and myself will be debating the topics that you send. And tomorrow, we're going head-to-head on the global economy.

What's better for struggling economies, austerity or stimulus?

Should we be cutting back or have more quantitative easing?

Your thoughts. Watch Ali and myself battle it out to see who gives the best one minute answer and then the quiz. Go to CNN.com/qmb and join in our debate on that.

Finally, tonight's Profitable Moment.

Look at this map. This shows you where I have been traveling over the last few weeks.

In Britain, I had to take my laptop out. I had to do liquids and gels and I had too much loot and I could only take one bag through.

In Los Angeles, I had to take me shoes off and me computers and me liquids and gels.

In Pisa, last night, well, I didn't have any liquids and gels, but my computers came out, me shoes stayed on.

Down in Brazil last week, everything stayed in the bag -- the lot, except on the international flight, where the computer stayed in the bag but the liquids and gels came out.

The worldwide map -- and when it comes to security, a worldwide mess.

And that is QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I hope it's profitable.

"MARKETPLACE AFRICA" is next.

END