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Quest Means Business
Dreamliner Investigation; Dow Flat; Small Gains for European Markets; US Trade Deficit Widens; US Economic Recovery; Japan's Stimulus Plan; Euro Rallying; 50 Shades Musical Opens in New York; Flu Outbreak in US
Aired January 11, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: There are blushes at Boeing. US regulators launch a safety review of the Dreamliner 787.
How about video games and violence? Joe Biden is to meet CEOS for the industry.
And lunch in New York. I have lunch with Jean-Georges as he sets his sights on Asia.
I'm Richard Quest from the Time-Warner Center where, of course, I mean business.
Good evening. The Dreamliner plane, the 787 from Boeing is under investigation after a week of high-profile problems. In Washington, US aviation officials voiced their concerns over Boeing's flagship aircraft while still insisting it is safe to fly.
Boeing says the string of errors are just part of the teething process for any new plane. The Department of Transportation and the Federal Aviation Administration want to know and want to find out exactly what's going on.
(BEGIN VIDEO CLIP)
RAY LAHOOD, US TRANSPORT SECRETARY: This review will cover the critical systems of the aircraft, including design, manufacturing, and assembly. Through it, we will look for the root causes of recent events and do everything we can to ensure these events don't happen again.
(END VIDEO CLIP)
QUEST: The investigation comes in the wake of five incidents -- yes, five of them, count them. Today, a Dreamliner engine generator was found to be leaking oil. On a different aircraft, a crack was discovered in a cockpit window.
While a joint investigation with the FAA isn't the best publicity for Boeing, the chief exec of its commercial planes unit, Ray Conner, says he welcomes the chance to improve safety.
(BEGIN VIDEO CLIP)
RAY CONNER, PRESIDENT AND CEO, BOEING COMMERCIAL AIRPLANES: We are fully committed to resolving any issue that affects the reliability of our airplanes, and if this joint review with the FAA results in improvements in that area, then we have all the more reason to do it.
(END VIDEO CLIP)
QUEST: Now, the question, of course, is what is happening with the Dreamliner 787? A plane that has only been in operation for a year, three years delayed, teething problems left, right, and center.
Mary Schiavo is a former inspector general for the US Department of Transportation. She joins me, now, from Charleston, South Carolina. Mary, you would have to agree, safe or not, it is a major embarrassment for Boeing that their prestige project is under review and under such a probe.
MARY SCHIAVO, FORMER INSPECTOR GENERAL, US DEPARTMENT OF TRANSPORTATION: Yes, it is a major embarrassment, but probably more important for Boeing isn't going to be very costly to fix the planes and they will have to pay the consequential cost to the airlines that are operating them now.
And also, so far, luck has been with Boeing, and we certainly hope it holds, but some of these could have been having a much worse outcome, shall we say?
QUEST: Right. But, here's the point, as I red the -- what the FAA said today. Even though they talked about it being electrical systems, they are looking design, manufacture, and assembly. Now, those are the three core differences in the way the 787 -- carbon, fiber, outsourcing -- this new Legoland way that Boeing was introducing for making planes.
SCHIAVO: That's correct. And the other question for the Federal Aviation Administration is if they are unsure of their certification. This comes for the Federal Aviation Administration at a little tardy time in the process.
Boeing largely self-certifies its planes. I was involved in the review of the 777 when they had the same problems back in mid-1995. It had, as Boeing would call it, "teething problems." And we had to look over that certification process as well.
SCHIAVO: But here, the FAA is saying they were unsure is a problem.
QUEST: Is it your gut feeling that the teething problems on the 78 are any worse than we saw on the 777 or -- well, I won't say the 380, because we know they had unique problems of its own -- but do you get the impression that the 78 is worse?
SCHIAVO: No. In terms of numbers of problems, it's comparable, but they are coming literally back-to-back-to-back. The two things that concern me most are the use of the lithium batteries, which has now caused the fire in Boston, which is new. And that it is composite.
So much of the plane is composite, and people probably don't remember that back in February of 2012, there was a delamination problem, which is very serious. That makes people remember the flight in New York in November of 2001 where there was a delamination problem, but that was on an Airbus.
So, those are very serious, and it's going to be hard for the Federal Aviation Administration to get its hands around this airplane because so much is outsourced.
QUEST: Right. So, to circle around as we come to the end, Mary, is there, do you think, any -- and I -- you've obviously done these investigations. I've covered the industry for many years. The last thing we want to do is go into rampant and reckless speculation.
But could you see a scenario where the airworthiness of the aircraft is called into question and its certificate of airworthiness is called into question or the plane is grounded?
SCHIAVO: I don't see that, unless a serious accident happens comparable to -- what? -- 25 years ago when the DC-10 was grounded in the wake of a serious, serious accident. If anything, this gives Boeing more cover. Now, when anything goes wrong, they say, look, FAA, you were right there with us. Now you're going to yank the certificate?
I think Boeing actually is getting more help than they probably want to acknowledge right now, even though it's got to be really uncomfortable for Boeing.
QUEST: Mary, we appreciate you, as always. The common sense that you bring and the expertise and insight put together, which makes for excellent discussion on this. Thank you for joining us.
Even though the US government insists the Dreamliner is safe to fly, investors rattled. Boeing share prices taking a -- well, it's down 3 percent lower here in New York, and that is despite -- that is despite what's been happening with the market and the plane so far, a wrong rebound.
It would seem the weekend has already started on Wall Street. The major indices are barely moving. The Dow is flat. You don't see it much flatter than that, 0.00. I think we can agree, that is flat. Wells Fargo is down nearly 1 percent, the first major bank to report on the earning season.
Europe's major bourses ended the sessions with gains. Not huge. The DAX was the best of the day. It gained nearly -- oh, no, I beg your pardon, I missed --
QUEST: It was the worst of the day. I misread the number. I thought it was up nearly 1 percent. It's 0.01 of 1 percent. Most banking shares advanced and most mining shares were also somewhat in the dark. You can see the numbers.
Coming up in just a moment, the US economy and how it's likely to phase with the trade gap and the budget issues. JPMorgan's chief economist is here and we are grateful, after the break.
QUEST: Now, the United States' trade deficit unexpectedly widened in November. The gap between the imports and the exports was almost 16 percent bigger than the previous month, the shortfall $50-odd billion between friends. It's the highest in more than five years.
It's a bit of a mixed blessing, because it means Americans are buying more consumer goods, like SmartPhones, from overseas. The export growth was tame by comparison. And that's the problem.
The sluggish economic growth may be picking up in the US, but the imports shows that consumer demand is firming up. The downside is exporting countries -- the exports aren't going to countries that are in recession.
Anthony Chan is the chief economist at JPMorgan Chase. Good to have you.
ANTHONY CHAN, CHIEF ECONOMIST, JPMORTAN PRIVATE WEALTH MANAGEMENT: Good to be here.
QUEST: Nice to be with you in person. What these numbers show and what we now know is that there is a fragility in the recovery. We know the recovery is out there. Just look at this shopping mall, people are spending money.
CHAN: That's right.
QUEST: But how fragile is it?
CHAN: Well, anytime you're growing below 2 percent, you can categorize it as somewhat fragile. It'd be a lot more comfortable if the economy was growing at 3 or 4 percent. It is not.
The trade numbers, of course, we still don't have December, but right now, just looking at those numbers, it appears as though we're going to have real GDP growth less than 1 percent in the fourth quarter. But that still doesn't tell you anything about next year.
QUEST: Right. So, over you're -- overall for 2012, you're looking at 2, 2.5 percent for GDP?
CHAN: Over the --
QUEST: Maybe a bit more.
CHAN: Maybe a little bit less for 2012. But as you look into 2013, you're looking at about 1.8 to 2 percent economic growth. And then, of course, you still have some uncertainty associated with the things that are going on in Washington, and that's one of the reasons why we've seen consumer confidence come down a little bit.
QUEST: What is your biggest single concern for the US economy at the moment?
CHAN: At the moment right now is that somehow Washington doesn't get their house in order. Because if that doesn't happen, then it introduces a much bigger negative headwind to economic growth.
Right now, the negative headwind to growth, given all the agreements, it's going to be a little bit more than 1 percent, it could be potentially more, and anytime you're growing below 2 percent, you can't afford that much more.
QUEST: So, is it a case of a deal needs to be done to create that certainty, whatever that deal is, you just want the deal? Or do you need a specific type of deal?
CHAN: I think at this point or at this juncture, a deal absolutely has to be done.
QUEST: Right. So, within those three things, we've got sequester, continuing resolution, and debt ceiling. I'm guessing you'd say the debt ceiling probably has to be number one just to get it out of the way.
CHAN: Debt ceiling is number one because you need the wherewithal to keep going. The other things, I presume, are going to fall into place. But debt ceiling is crucial.
QUEST: Right. Debt ceiling is a technicality, really, but it has to happen.
CHAN: It has to happen.
QUEST: Once we get over that, at what point does the US economy start picking up its own momentum towards 2.5, 3, 3.5 percent, if we ever get there? Or maybe we don't get there.
CHAN: I think in the second half of the year, you will get there if these agreements are flushed out and somehow certainty comes back into the picture. There's still a lot of pent-up demand on the part of consumers, when you look at autos. A lot of pent-up demand on the part of businesses that want to do a little bit more capital expenditures --
CHAN: -- but I've said --
QUEST: Really? But --
CHAN: -- that uncertainty is holding them back.
QUEST: But we hear -- we hear the contrary to that, there's still deleveraging going on out there.
CHAN: Deleveraging is going on, but by the way, that's actually a positive thing, because with all this deleveraging that has gone on, it's made consumer balance sheets a lot healthier. It certainly is going to make businesses a lot healthier and more willing, if they somehow have the uncertainty removed and they believe that demand is going to pick up in the second half of the year.
QUEST: It's the beginning of the year. We need to be optimistic, pessimistic, or you can't quite decide what you should be?
CHAN: Well, as Keynesian -- as Keynes always told us --
QUEST: Oh, you're a Keynesian!
CHAN: I didn't say that.
QUEST: You're a Keynes --
CHAN: But as Keynes has always told us, you need those animals first, so you do need to have pessimism go down to a low level so that business and consumers can come back into the picture. Nothing to do with Keynes' philosophy in general, but that's a certainty.
QUEST: How good to see you.
CHAN: Pleasure again.
QUEST: Thank you so much for coming in.
CHAN: All right.
QUEST: Thank you very much. Some other news now. Japan's new prime minister has unveiled a plan to spend his way out of recession. Shinzo Abe will pump $117 billion into public work -- that's a lot of money -- disaster recovery, and assistance for small businesses. It will lift GDP by 2 percent, he says, create 600,000 jobs. In Tokyo, here's Alex Zolbert.
ALEX ZOLBERT, CNN INTERNATIONAL CORRESPONDENT: It is the latest effort to try to pull the world's third-largest economy out of the economic doldrums. Today, Japan's new prime minister, Shinzo Abe, unveiled an economic stimulus package totaling nearly $230 billion US, about half of that money coming from the central government.
This entails key spending on big infrastructure projects. Shinzo Abe also wants to help Japanese companies improve their footprint overseas. It also includes increased spending on the reconstruction efforts up in the tsunami zone.
Either way, Shinzo Abe has made it clear that it is out with the old economic policies and in with the new.
SHINZO ABE, PRIME MINISTER OF JAPAN (through translator): We will boldly change gears from redistributing wealth to instead generating wealth. Breaking away from an economy that continues to shrink, we aim to focus on innovation.
ZOLBERT: This is the biggest economic stimulus package since 2009, when Tara Aso was prime minister. Today, he is the country's finance minister. There are plenty of critics of all of this. They say that while infrastructure spending might help in the short term, what is really needed in the long term is innovation from corporate Japan.
One other proposal that we may see on the table, according to local media, is raising taxes on the rich. Either way, the markets continue to cheer on Abenomics. With the yen weakening further today here in Japan, the Nikkei was up another 1.4 percent.
Alex Zolbert, CNN, Tokyo.
QUEST: Now, here we are at the Time-Warner Center in New York, a shopping mall. This will do you no good whatsoever. It is a euro bill. So don't bother. But the Currency Conundrum concerns the euro. A bit of an old facet one.
The European Central Bank says it has recovered 12 percent fewer counterfeit bank notes in 2012 than it did the previous year. What is the official checkpoint for working out if it's real or not? Is it feel? Is it scratch, rip, or smell? Or fold, measure, repeat? We will have the answer for you later in the program.
The euro is rallying against the dollar for the second straight day. The ECB's decision to leave interest rates unchanged is boosting the single currency. Those are the rates --
QUEST: -- this is the break.
QUEST: Here in New York, a new twist in an erotic novel is being thrust upon theater-goers in the city. It is "50 Shades," the musical. It's a spoof, of course, on the best-selling book by E James, packed with innuendo, it's really rather lewd. Although I'm assured everyone keeps their clothes on.
It's playing to sold-out audiences, as Felicia Taylor now reports, and I believe, I'm told, it's reported, sources say, that she enjoyed the assignment.
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT (voice-over): Racy, raunchy, risque -- some might call it soft porn.
TAYLOR: It's the book that made women squeal with pleasure.
UNIDENTIFIED FEMALE (singing): Wanna open my eyes and see all 50 shades!
TAYLOR: Now on stage, others are belting out a different kind of tune in its honor.
UNIDENTIFIED FEMALE (singing): Open your book, open your mind --
TAYLOR: The spoof is a titillating spectacle with plenty of sensuality. The stage version parodies the erotic bestseller by centering around a middle-aged ladies' book club, obsessed with the more colorful parts, which become the butt of jokes through a series of sketches.
TAYLOR (on camera): Here we are with the cast of "50 Shades" at their dress rehearsal to get a firsthand look behind the scenes before they actually hit the Great White Way.
JODY SHELTON, MUSICAL DIRECTOR: A couple of friends of mine actually came to me with the idea, and initially I said, what a terrible idea. I'm not going to -- I can't make that funny. It's a very serious thing, you know? About sex. But I was convinced, and we started writing these songs, and they were really, really funny.
UNIDENTIFIED FEMALE (singing): And they get nasty, and sexy, and do what they want to do.
TAYLOR (voice-over): This musical production is also as erotic and decadent as you'd expect.
SHELTON: You ready, guys?
TAYLOR: The collaboration of comedy writers creating an ultra-spicy script.
UNIDENTIFIED MALE (singing): You don't have to have a ring-a upon your finger to ride my pinga mi amor.
TAYLOR: It's all capitalizing on the frenzy caused by this dirty sensation.
UNIDENTIFIED FEMALE (singing): How much can I handle?
TAYLOR: And if you have an image in mind of Ana and Christian, you just might be surprised.
CHRIS GRACE, ACTOR: I think this is the role I was born to play, really.
GRACE: I read in the book he says he has dark hair, so it's like, I'm perfect for this.
TAYLOR (on camera): And now, this kinky musical is taking its show on the road, traveling to many different cities across the United States, and it's all because of this book, "50 Shades of Grey."
TAYLOR (voice-over): Which is now nearing a half a billion dollars in sales, having sold more than 65 million copies worldwide. Hollywood is also trying to cash in on the frenzy, but for now, fans can get their fill of Ana in Christian on stage.
(CAST SINGING HIGH NOTE)
TAYLOR: Felicia Taylor, CNN, New York.
QUEST: Some suggest it is the original definition of a good bodice- ripper. Others say nothing more than smut. Well, whatever it is. I did actually buy the book and haven't quite managed to get around to reading it. No doubt, it'll be read on one of those long trans-Pacifics or trans- Atlantic Ocean.
Now, the Twitter address where you and I can have our dialogue is @RichardQuest, and the question I'm interested to know is, if I gave you a ticket for a Dreamliner flight, I assume you'd sit onboard and join me. Or are you concerned about the Dreamliner.
Anyway, @RichardQuest is the debating point where you and I can talk away from the program on the issues that we discuss in our nightly conversation.
Coming up in just a moment, we will be discussing whether or not the market rally really has legs. QUEST MEANS BUSINESS, we are in New York. Good evening.
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 militant Islamic rebels who've spread chaos across northern Mali are now facing French forces. France's foreign minister says French planes have mounted air strikes against the rebels to turn back their push towards the south. He has denied reports that Nigerian and Senegalese troops are involved.
Syrian rebels say they've captured a regime airbase that they've been targeting for days near the northern city of Taftanaz. Meanwhile, diplomats from the US and Russia met with the UN envoy in Syria. Lakhdar Brahimi says the best way to resolve the crisis and conflict will be for the powers outside of Israel to agree on a political solution.
Barack Obama says American troops in Afghanistan will be shifting to a support role within the next few months. Mr. Obama made a joint statement with the Afghan president, Hamid Karzai, a short time ago after talks at the White House. He says they've come close to their goal of dismantling al Qaeda.
And as we've been talking on this program, US regulators are launching a detailed safety review of Boeing 787 Dreamliner plane. The announcement came just hours after two more mishaps on Friday, both of them in Japan. The head of America's Federal Aviation Administration says while officials are confident the plane is safe, they are concerned about the recent incidents.
Here in the United States at the moment, there is pretty much one topic of conversation besides the budget debacle. People are far more concerned about influenza and the cost it will have and how people are getting flu shots. Don't get too close, Maggie Lake!
QUEST: I finally come to this side of the Atlantic and we have to keep our distance.
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: That's right, that's right. You're a brave man to come over here at this moment, Richard.
QUEST: Come on!
LAKE: Haven't you seen the news? We need to be standing here with face masks on.
QUEST: It is -- I realize Maggie is not the medical correspondent --
QUEST: Not yet, anyway.
LAKE: I'm mom in residence, so I'm paying close attention to this, because it is quite serious.
QUEST: Let's start with the medical, then we'll do the economic. Is it serious? Is it just a fuss about nothing?
LAKE: No, it's not a fuss about nothing. If you look at maps and tracking the states that have big jumps, what they would consider severe, it's almost the entire country. So, this isn't just limited. Very serious in some urban areas, like Boston.
But yes, it is serious this time, in some cases double or triple what they'd expect to see in a normal season.
QUEST: And the vaccine, the old Tamiflu, made by Roche. Is it once again a cash cow for them?
LAKE: Yes. And it is -- the good news is it's working. It's proving effective when they use it, so that seems to be good. The problem, though, Richard --
LAKE: -- is what happens when you have the flu? Lay down, right? I was in bed for four days over the holidays --
QUEST: Oh, now we're getting to it! Now we're getting to it! The hardship of war stories.
LAKE: That's right. But I was off, so it was OK. But for the rest of us, we're seeing massive call-outs from work, people absent. And you know what that means: a hit to the economy. One more thing we need to worry about. And the numbers are big.
QUEST: Are you saying that there is a serious worry about what's happening with the flu?
LAKE: Yes. A situation --
LAKE: Economically for short term. We bounce back, of course. But you may start to see some numbers be affected by this. You have people out, people aren't at work. $83 billion is the estimated cost. Some of it is direct, about -- more than $8 billion in direct hospitalization and medical.
But then you have things like lost productivity. This is a lot harder to measure, but it's in the billions, people who just can't make it into work, who are absent, so you don't get the projects done --
LAKE: -- all of that type of stuff.
QUEST: We're hearing you, Maggie. (Inaudible) just basically say is it your gut feeling -- we're talking about (inaudible) earlier.
QUEST: The fragility of the recovery in the market, the market goes up, the economy is fragile, how do we square those two facts?
LAKE: A lot of people say the market's continuing so -- because of all the liquidity that central banks are flooding into the system. But, Richard, you always tell me I'm here to rain on your parade. I'm going to turn it around this time, and I'm going to tell you the bullish scenario, which is you've got all the liquidity from the Fed pumping in; it's sloshing around.
And you're going to get a resolution in Washington, even though it's going to be ugly. And this is going to be the year that people switch out of bonds into equities. I had a strategist tell me 20 percent for equities this year.
QUEST: We're in New York, so we shall do it in the New York way, particularly bearing in mind the flu.
And we are both as safe as we'll ever be.
QUEST: (Inaudible) to see you, Maggie.
Now if you -- if I was a real gentleman, I would have taken Maggie to lunch. I would have done more than just take her to lunch, I would have lunched her in one of the really top restaurants just over there. In fact, behind the TimeWarner Center is the Restaurant Jean-Georges. Lunch time's been and gone and New York is the global culinary capital.
But for the big restaurants like Jean-Georges, with its epitomous chef, Jean-Georges, they are now looking further afield to try and expand their empires, particularly to the Gulf and in Asia. I went to discover over lunch.
(BEGIN VIDEO CLIP)
JEAN-GEORGES VONGERICHTEN, CHEF AND RESTAURATEUR: I think (inaudible) New York the last 25 years (inaudible) in the city. Then we started in Europe. I went to Paris, London, went to Vegas. But (inaudible) Asia (inaudible) China, Shanghai.
We have a Jean-Georges in Shanghai, opened about eight years ago. We opened a new Italian restaurant (inaudible). We have two restaurants in Doha, which is in the Middle East.
QUEST: So it's fair to say (inaudible).
QUEST: It's fair to say that you're going where the money is?
VONGERICHTEN: Yes, of course, I mean (inaudible) --
QUEST: Where the growth (ph) is?
VONGERICHTEN: I mean, food is important for me, but as a restaurant group, to expand, you know, we have to look where the best market are, where the best markets are. (Inaudible) we believe is in Israel.
QUEST: You can't just transplant this. I mean, this is magnificent.
VONGERICHTEN: I know. (Inaudible) the location (inaudible) --
QUEST: The location, the ambiance, the New York drama. But at the same time, you've got to take some of this and put it into that. How (inaudible)?
VONGERICHTEN: (Inaudible) we do. I mean, we take the (inaudible) of this restaurant for example, (inaudible) Jean-Georges (inaudible) --
QUEST: Which is what?
VONGERICHTEN: The food. First of all, the food. Then we (inaudible) great location.
QUEST: Where would you like to open a restaurant? Where's your goals in the next -- I won't hold you to this, but in the next two years, where are you going?
VONGERICHTEN: We're looking at Singapore. (Inaudible) for food. (Inaudible) big food is (inaudible) Japan. (Inaudible) Japanese (inaudible). And we look at Korea. (Inaudible) in China as well.
QUEST: We talked a lot about the food.
QUEST: And we don't seem to have any food except over here.
VONGERICHTEN: Right here, yes.
QUEST: All right.
VONGERICHTEN: For me, the good food starts with good product. For example, this is like an egg, I like scrambled eggs with --
QUEST: He likes it.
VONGERICHTEN: -- with some mocha(ph) cream or some caviar. This is (inaudible) with some avocado, radishes -- something I learned in Asia is (inaudible) soy.
QUEST: Ginger and soy?
VONGERICHTEN: This is ginger and soy vinaigrette. And with the raw tuna I think it's magic.
On the food (inaudible).
QUEST: And then finally, as I taste this, which is --
VONGERICHTEN: This is a black sea bass, local fish from Montauk, celeriac. Well, this is a beautiful green curry sauce. I call it a James (ph) sauce. It's made of lemongrass, herbal (inaudible).
QUEST: In five years' time, how would you like to balance the Jean- Georges group, between U.S. and Europe and other parts of the world? (Inaudible)?
VONGERICHTEN: I think we're always going to be based in New York. So I would say 50 percent New York and the other 50 percent around the world. Globally.
QUEST: Fifty percent New York, 50 percent rest of the world.
VONGERICHTEN: That's right.
QUEST: And a lot more in Asia. Thank you so much. I need to send you back to your kitchen.
QUEST: (Inaudible) have guests, which is a very good (inaudible) so I can get back to eating (inaudible).
VONGERICHTEN: (Inaudible). Thank you so much.
(END VIDEO CLIP)
QUEST: The beauty here is if that I can't go to the restaurant, the restaurant comes to me (inaudible) Jean-Georges and (inaudible) program.
After the break, we have a weekend weather forecast and why the humble business card may be a thing of the past.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Time for the answer to today's "Currency Conundrum," we asked you to identify the ECB's three-point checklist for spotting fake euro banknotes. The answer is A, the feel, the look and the tilt. If you come back to me --
(END VIDEO CLIP)
QUEST: -- you feel for the raised print, you look to see the watermark and the security thread and then you look to see the shifting hologram, which is there. And at that particular point you realize is a real 50-euro note, which will do me absolutely no good in this place, so we'll put it away before somebody decides to take it.
The vice president of the United States, Joe Biden, is meeting with members of the video games industry. They'll talk about gun violence and how it's represented in popular games as we're hearing that the White House may push for an assault weapons ban.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Games like "Call of Duty" will probably (inaudible) with video games leaders. The vice president says his panel will deliver recommendations to curb violence to President Obama by Tuesday. The president created the panel last month after 20 children were gunned down in a Newtown, Connecticut, school.
(END VIDEO CLIP)
QUEST: You're watching QUEST MEANS BUSINESS, the program coming to you live tonight from New York.
Jenny Harrison is at the World Weather Center for a weekend world weather outlook. Good afternoon.
JENNY HARRISON, CNN METEOROLOGIST: Good afternoon to you, Richard. Yes, it's looking to change a little bit across the northwest of Europe. But of course it's been a very wintry picture the last couple of days in Germany, particularly, but also across into Poland, usual amount of cloud on that map. But there's a new system coming in.
There's another one following that. But it's a temperature. This is what's really going to change over the next few days already has begun to change across more central areas. Right now it's -1 in Berlin, -3 in Munich, just a degree above freezing in London.
And that cold air filtering right the way down even in some parts of northern Spain, Istanbul, 8 Celsius, bit of a milder feel to the south of there over the next few days. But look at this. The last few hours, a lot of snow's been coming across Germany because we have this system coming across, bringing the moisture.
But because the air is so cold, it is turning over to snow and there will be a change. More of this rain you can see across the U.K. and indeed we'll see some snow there as well, not just yet. As we go through the first part of the weekend, that cold air just really spreading across much of central southern northwestern Europe.
So this system, which is coming in right now, just to the south of the U.K. but it will certainly turn to snow as it works its way across parts of France. But really, (inaudible) going through the latter part of the weekend that that system moves out of the way and another system comes in from the northwest.
And this is where we're going to see a return across much of northern and western Europe to snow, but also some very icy conditions. And this shows you the temperatures, how they're going to trend over the next couple of days.
You see that blue coloring in particular turning almost a shade of pale purple, that indicating temperatures well below the average, as I say, filtering all the way across the south. So a very unsettled picture.
A lot of snow in the forecast through much of northern Spain, across into France and also we will begin to see that snow pushing into the far northwest as we head through the latter part of the weekend.
So widespread snow, not particularly big amounts. Be prepared for some delays. The winds will be quite breezy, London, (inaudible) we'll see some snow as we go through Saturday morning. Paris, the snow in the evening hours, and as you can see, temperatures really quite low, just 4 Celsius in London this Saturday, Richard.
QUEST: Thank you very much. Jenny Harrison at the World Weather Center. Jenny is always calling me a dinosaur, a relic of the past.
HARRISON: Not always. Come on. I mean, you know. You try your best, but --
QUEST: I try me best. Thank you, Jenny.
To what I'm referring, of course, is the fact that I still hand out business cards, one for you, one for you. Do have a card. How about a card? It's the way you do business. Now, of course, in this digital area, we need to be getting rid of the little pieces of cardboard and going digital.
Samuel Burke is with us to discuss some of the ways in which we get rid of them.
SAMUEL BURKE: A thing of the past.
QUEST: A thing -- OK. So what do I replace them with?
BURKE: Something digital, an application. For instance, Cardagain is an application. It allows you to just take a picture of a person that you meet at a business conference, let's say. And if that person also has the application, then you have their contact information.
QUEST: You have just put your finger on the (inaudible) -- well, don't look at me like that.
BURKE: What's the (inaudible)?
QUEST: If that person has the app. I have had (inaudible) in my iPhone for years and I've never used it once.
BURKE: But I would say to you the same thing about Facebook. Two people have to have Facebook in order to for it to work. At some point --
QUEST: There's 500 million people out there with Facebook.
BURKE: At some point, these are going to be a thing of the past. And like everything else, they're going to go on one of these devices and maybe a company like Facebook might buy one of these applications.
QUEST: So you're talking about Cardagain, (inaudible) take a picture and it (inaudible).
QUEST: What's the other one?
BURKE: The other one's Bump, which you just mentioned. Not only can you exchange information by bumping devices -- now I have your contact information -- you can also exchange content that way. Not only the business (inaudible) other types of information, photos, videos.
QUEST: So that's what (inaudible) is?
BURKE: That's Bump.
QUEST: Right. So we've got -- and I've got Bump but I've never used it more than once.
QUEST: Next one.
BURKE: Addappt. This one I really like. I think it's really interesting because you just use your email address and that way it keeps you updated as well. So let's say you change your number after we've exchanged cards, which is another bad thing about those things of the past. You change your number then it automatically updates on your phone with all Richard Quest new contact information.
QUEST: Why are you so sure that these things will be the future?
BURKE: Because that's what's happening with everything. And what happens when you run out of these business cards when you're at a convention? That always happens to me. I run out and then I've met Richard Quest and I want to give him my business card and now I don't have it. They never run out on these devices.
QUEST: My experience with using it digitally is it never works. We never (inaudible) the same -- we never have the same app. We end up fiddling around. The contact is lost.
BURKE: One of these apps is going to be the leader at some point. It's going to go that way. I don't know which one it's going to be, but I think Facebook, Twitter or LinkedIn, especially LinkedIn might buy one of these applications. And then we already have the Facebook app, for example. So it'll already be on there. We'll all have the app and we'll all exchange information that way.
QUEST: Which one of these do you like the best? (Inaudible) best. That's asking you to make a judgment. Which one do you think is -- has legs?
BURKE: I think Addappt has a chance to work, because a lot of companies like (inaudible) people move so often, it would be great if you could have something that might automatically update.
So when you go from the London bureau, you move to Atlanta, then we have something that keeps us automatically updated. There's a good chance one of the is going to make it big, and we'll be using those instead of these.
QUEST: I would tell you about Addappt except I tried to -- I downloaded it and 21/2 hours later, I'm still waiting for that email from them to activate it. Samuel Burke, we thank you very much. Would you like a card?
BURKE: Oh, thank you.
QUEST: (Inaudible) very last (inaudible).
And that is where we leave it for tonight from New York. I thank you for making time to join us for our conversations on business and economics. That's QUEST MEANS BUSINESS. I'm Richard Quest in New York. As always, whatever you're up to in the hours ahead, I hope it's profitable. I'll see you back in London on Monday.
ROBYN CURNOW, CNN HOST: You're watching MARKETPLACE AFRICA. I'm Robyn Curnow in Johannesburg, South Africa. Now the (inaudible) can get pretty crazy sometimes. But it's certainly not as bad as Lagos in Nigeria, where the roads get so jam-packed that a short journey can take a few hours, which is why Nigeria's emerging (inaudible) turning to online shopping.
(BEGIN VIDEO CLIP)
VLADIMIR DUTHIERS, CNN CORRESPONDENT (voice-over): When Sem Shagaya (ph) moved back to his native Nigeria after 10 years of living in the United States, he saw an opportunity.
SEM SHAGAYA (PH): We think that over the next five years we're going to see African income levels rise very much the same way they rose in the early part of the 20th century in the United States. I think you're going to see that here over the next 5-10 years. And we want to be a part of that. We want to spread our wings and ride that wind.
DUTHIERS (voice-over): Despite poverty, political and ethnic divisions, he believes the economic winds in Africa's most populous country are blowing in the right direction.
Nigeria has been growing at an average of 7 percent over the past few years. It has an expanding middle class and more young consumers have disposable income. But it's not just income levels that are rising. From 2000 to 2010, the number of Internet users rose from 200,000 to more than 40 million.
SHAGAYA (PH): The Internet is as, if not more, a profound force than the printing press, than the steam engine and it represents a shift in the way society's structured and commerce is done.
DUTHIERS (voice-over): Faced with those statistics, Shagaya (ph) says starting the e-commerce business was a no-brainer.
SHAGAYA (PH): I got to participate in what I guess people call the dotcom, the first dotcom boom. And doing a lot of work, therefore, for online companies and the Internet was really just changing the way people were doing business and (inaudible) society was structured and (inaudible). I think that influenced me greatly.
DUTHIERS (voice-over): So when Shagaya (ph) came back to Nigeria, he launched konga.com.
SHAGAYA (PH): Konga is an online retailer that allows Nigerians to order something, anything they want from anywhere in the country where we will be able to get it to them, from -- for a -- in as a little as 24 hours or at most three days. That's our promise to them.
DUTHIERS (voice-over): But even with an expanding economic landscape, delivering merchandise across the country quickly and efficiently would mean navigating Nigeria's physical landscape, a traffic-choked challenge across crumbling roads that companies like Amazon.com rarely if ever face.
SHAGAYA (PH): But in Nigeria, we don't have a functioning postal system in any real sense of the word. So Konga's greatest challenge has been to create that from scratch, a fleet of motorbikes and delivery men. We've had to build our systems for getting goods really anywhere in Lagos within 24 hours and anywhere in Nigeria within 72 hours and less. And then that's a huge challenge.
DUTHIERS (voice-over): There are other challenges. Credit card usage is growing, but risks associated with online scams have kept Nigeria mainly an all-cash society.
Only 10 percent of Konga's customers use credit cards. Either way, buying online is catching on.
DUTHIERS: Do you ever regret coming back to Nigeria and starting your own business?
SHAGAYA (PH): No, not for a second. You will find that Nigeria is an amazing economic environment to do business. The margins are generally better than other parts of the world.
DUTHIERS (voice-over): And Konga is not alone. There are more than 70 online retailers in Nigeria selling everything from books, food and shoes to even used cars. Shagaya (ph) says he welcomes the competition.
And Nigerians likely do as well, because it means competitive pricing. And when it comes to shopping, like everyone else, Nigerians love a good deal.
SHAGAYA (PH): But the immediate sort of objective is to give the Nigerian customer the best price, the best convenience, the best selection of goods that anybody else can give them in Nigeria, whether they're online or offline.
And you (inaudible). You find (inaudible) blender. You order it; we'll call you to verify, because also in this part of the country -- sorry; in this part of the world, people will want that human contact. You need to build trust with people.
And then as soon as they check that you indeed want this good, in a few minutes, really, there's somebody in the warehouse that's running around to pick that item for you.
DUTHIERS (voice-over): Shagaya (ph) employs 70 people, up from 10 just four months ago. He says that comes from growing customer demand. But while the company's expanding, he knows that his country still has challenges. Unemployment and grinding poverty remain major issues, with more than 20 percent of the population jobless. That number is even higher for young people, driving crime and discontent. All problems that threaten much more than his company's future.
SHAGAYA (PH): We are under no illusions that this was a one- two- or three-year journey. We knew that this was a -- this is going to be a very long road to build out this system that we think we owe Nigerians to built out, to allow them to consume with dignity and sustainably.
I'm not saying that what we're doing is altruistic by any means. We're a business. But I think also what we're doing is building our country.
DUTHIERS (voice-over): It's that kind of thinking, Shagaya (ph) says, that has fueled the growth of great companies and industries around the world. He's hoping to continue that trend in his home country -- Vladimir Duthiers, CNN, Lagos.
(END VIDEO CLIP)
CURNOW: (Inaudible) Vlad Duthiers coming (inaudible) Nigeria's growing appetite for online shopping. Well, after the break, I think the head of Barclays in Africa (inaudible) talk about doing business on the (inaudible).
CURNOW: (Inaudible), which is one of South Africa's largest banks and the British bank, Barclays, are the (inaudible) to combine their Africa operations. Now this will create the largest retail bank in Africa, both by branch and by customers. I recently sat down with Kennedy Bungane (ph). He's the CEO of Barclays Africa.
He's also head of Africa's strategy for (inaudible). We chatted about the challenges and opportunities here in Africa.
CURNOW: Your job is (inaudible) trends on the continent, people invest money into what you're thinking. What is the biggest trend, do you think, for next year?
KENNEDY BUNGANE (PH), CEO, BARCLAYS AFRICA: Well, I think Africa's telling us a different story. It's a new story. It's a story of a continent on the rise. It's no longer just hope and hype; there's actually facts to bear this thing up.
CURNOW: Because it is the worry that this has been a lot of hype, people's sort of wishful thinking this is the new frontier. What are your facts?
BUNGANE (PH): Well, the fundamental (inaudible) significantly in the decade leading to 2000, average conflicts annually decreased from 4.8 to 2.6 percent throughout the continent, OK? The fundamentals are improved.
Governance, institutional frameworks, the level of democratic (inaudible) taking place, all of these are enabled government to (inaudible) the rich natural resources that have always been there in the continent. Harness them that much better for the growth of the economies.
CURNOW: South Africa has had a tough year, two significant ratings downgrades, Marikana, huge strikes in the mining industry, what does that mean for South Africa? Is it the odd one up in the successful African story?
BUNGANE (PH): Well, Robyn, 27 out of the 30 largest economies in Africa have had isolated growth over the last five years, you know. So while South Africa is a significant contributor to the African economy, and while it has had a tough time, we shouldn't lose focus here.
This, you know, Africa is not the homogeneous entity. It is 54 differently challenged and economies with different opportunities as well. But the point for me here is around infrastructure.
If South Africa and the rest of the continent succeed in forming the right partnerships between the public and the private sector to address infrastructure better, we will unleash the potential of intratrade (ph), of fixed direct investment in the continent and, you know, infrastructure does have a -- this wonderful thing about when job heavy (ph) and will be able to employ our people, will be able to bank on this youth (ph) dividend that I think will catapult our growth story in Africa to a new and a different level.
CURNOW: It makes perfect sense. But a country like South Africa in the last six months, the last year, has put up a sign that says perhaps temporarily closed for business; we've got really big things going on.
The mining, the social unrest, strict labor laws, labor unrest, a government that seems a little bit rudderless (ph), investors looking in, particularly to South Africa might be thinking, listen, do I really want to invest in South Africa now? These might or might not be true. But these are assumptions. And this is (inaudible).
BUNGANE (PH): Very true. And we've got a lot to do to get that right, you know, to manage what is a vibrant, loud, democratic process within our ruling party and within the national discourse, to manage that better in a disciplined fashion and stop all of the noise that's around peripheral issues, (inaudible) in the mind of the investor.
We've got a lot of work to do in South Africa to get this right. But you know what, Robyn, we know how to get it right. We must just do it better and more consistently.
CURNOW: What are investors telling you?
BUNGANE (PH): They say --
CURNOW: Are they spooked?
BUNGANE (PH): They're telling me there's too much noise, and we must quiet it down --
CURNOW: (Inaudible) there's -- what is it (inaudible)?
BUNGANE (PH): Investors understand democratic processes. We've just seen the U.S. elections and how loud and noisy and sometimes quite conflictual (ph) it was. But you know what, they understand that. I think investors are getting to appreciate our own version of noise and --
CURNOW: There's an inconsistency here that is (inaudible) concerning?
BUNGANE (PH): They're getting to understand that noise. There's a lot of work we must do to clean up our act, no doubt. And Marikana is a case in point here. It is a tragedy that (inaudible) should never have happened. You know? And we've got lessons to learn from this. If there was all of this noise, we've just got to do more consistently. We've got to do it much better.
(END VIDEO CLIP)
CURNOW: Right. From the (inaudible) streets of Johannesburg, I'm Robyn Curnow and now remember, you can always find us online, stories, interviews, all sorts of information is at CNN.com/MarketplaceAfrica. See you again next week.