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Quest Means Business
Gloomy EU Economic Forecast; European, US Markets Rebound; EU Outlook; Maersk's Trade Warning; Maersk Trade Hub; Dollar Steady Against Euro; African Mining Stocks Higher Despite Turbulent Week; Obama on Spending Cuts; Italy Votes
Aired February 22, 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 frosty conditions ahead. A grim forecast for the economy of the eurozone.
Too little cargo and too much capacity. The Maersk chief executive tonight. The next two years will be tough.
And our pick of the flicks. Forget the Academy Awards, we're showing you the most profitable picture.
I'm Richard Quest. It may be a Friday, but of course, I still mean business.
Good evening. Europe's winter forecast is pointing to a year of withered growth. We've got the latest and fastest numbers on the eurozone economy from Eurostat and the Commission, and it shows that the eurozone economy will shrink again in 2013.
The number, 0.3 percent, according to the Commission. That's worse than they were forecasting in the autumn review. It says GDP in the European Union is bottoming out, is the phrase that they are using, but whichever way you look at it, and certainly when you consider some countries: Greece, for instance, will have 27 percent unemployment in 2013.
Well, the vice president of the Commission, Olli Rehn, said while confidence can still improve, these numbers, they're not pretty.
(BEGIN VIDEO CLIP)
OLLI REHN, VICE PRESIDENT, EUROPEAN COMMISSION: The current situation can be summarized like this: we have disappointing hard data from the end of last year, some more encouraging soft data in the recent past, and growing investor confidence in the future.
(END VIDEO CLIP)
QUEST: Now, the Commission always calls it the spring, the autumn, the summer, and this is the winter forecast. And bearing in mind that Europe's economy could be pretty much icebound for the next 12 months, we decided the best way to show you just how cold and freezing the economic conditions are is no better than to bring in Jenny Harrison at the World Weather Center. Because Jenny, take this economic data and give it the Weather Center treatment.
JENNY HARRISON, CNN METEOROLOGIST: We will do just that, Richard. And as you said, of course, we're seeing some really frosty economic conditions in the eurozone. Now, the recovery is cooling off significantly in places like the Netherlands and Italy. Both are going to see growth fall before zero in the year ahead.
Now, what might be most worrying is the severe cold front spreading in from France. Almost no growth forecast the second year running, but the EU says GDP temperatures may have well have bottomed out, so things will gradually warm up as the year goes on.
Now, as far as unemployment goes, we're seeing areas of high pressure across the eurozone, and that pressure's only going to increase in the months ahead. The needle on the jobless rate barometer is going to tick up above 12 percent in the eurozone and above 11 percent in the wider EU area.
We should mention the one bright spot in the forecast. There have been deficit storm clouds gathering over some Southern European countries, well, those clouds will get smaller as the year goes on, with deficits down to around 3 percent across the continent. And in the case of Spain, Olli Rehn says it may get more time to meet its targets and therefore save for a rainy day. Richard?
QUEST: Jenny Harrison, putting it absolutely in perspective for us. We'll see you later for meteorological matters instead of economic ones.
That is the scenario. European markets had a strong session to round off a lackluster week. You might wonder why, if you look at the indices, that they all finished higher. This had much more to do with rebounding from the losses on the back of monetary policy fears. They also got support from the Ifo survey that showed business sentiment better than expected in Germany. Paris up 2.25 percent.
US markets are bouncing back. The Dow was up over 100, now just up about 100, 14,000, quite close, nearly three quarters. It's still on track for its worst week of 2013 so far. And this number, of course, this is perhaps the bounce back from the worries about the Fed.
Mohamed El-Erian is the chief executive of PIMCO, joins us now from Newport Beach, where the -- I think probably the economic temperature and certainly the physical temperature is a lot better than Jenny Harrison was forecasting.
Mohamed, as I look at these numbers, 27 percent unemployment, euro area growth minus 0.6, minus 0.3. This is downright depressing at this stage in a recovery. Or not?
MOHAMED EL-ERIAN, CEO, PIMCO: It is depressing, and it's even more depressing that we think that these numbers are too optimistic. So, rather than a contraction of minus 0.3, we're looking at a contraction of 1 to 1.5 percent.
Two things, also, to note. It is not just peripheral Europe that's weakening. Even the core Europe -- France, Germany, Netherlands -- they are slowing down. And secondly, the social and political implications are meaningful. This will increase the wave of citizen dissatisfaction that is going across Europe --
QUEST: Right.
EL-ERIAN: -- and which is questioning the political structure. So, 2013 is just not economic fragility, it's also social-political fragility.
QUEST: Would you expect -- I know we always look at consensus numbers of different houses, but would you expect these numbers to deteriorate even further, or do you think we are pretty much at the bottom on these numbers?
EL-ERIAN: No, we expect they will deteriorate more. So, we are looking for contraction of 1 to 1.5 percent. So, call it a percentage point more than what the European Commission is looking at. And that will mean, unfortunately, higher unemployment and will mean a worse debt-to-GDP ratio.
QUEST: Right.
EL-ERIAN: And this should be an alarm bell going off not only in the national capital, but in Brussels and in Frankfurt, use the ECB's bridge to put in place policies that improve growth. Don't wait any longer.
QUEST: OK. So, into that maelstrom we now have a really complicated scenario. We've got the Fed looking at those minutes, they're going to review the efficacy of QE3 in March. So, that's -- no one thinks they're going to reverse it, but there's the potential to stop fiddling with QE3.
We've got the MPC talking about doing more. And we've got Draghi saying he will do, may do, can do, but not just yet. It's complex.
EL-ERIAN: Oh, it sure is. Think of central banks having been thrust into a leadership role with imperfect tools. So, what they are finding out is that what they do doesn't just cause good things, but it also breaks things. The collateral damage, or what Bernanke calls the costs and risks.
And what the minutes tell us is that there's a very active discussion about the costs and risk. But agree with you, Richard. It does not mean that it will stop. It just means that they will not deliver the good outcomes as easily as they thought they would.
QUEST: Finally, Mohamed, do you think we had -- well, not -- me. Do you think I had naively assumed after the QEs were in place and after all the things we'd gone through and the fiscal cliff and the this and the that, that we were heading for smoother, calmer waters, and we're absolutely not?
EL-ERIAN: Not as yet. Remember, central banks can only provide a bridge to a destination. They cannot deliver the destination. For the destination to be delivered, you need other policymakers with better tools to get off the sidelines. And so far, because of political dysfunction, they simply are not stepping up to their responsibility.
So, we've got step one, the central banks. We need step two. Otherwise, things are going to start deteriorating again.
QUEST: We're gonna leave you by asking about -- we're not using the word "sequestration" here at CNN. We've decided that sequestration is a meaningless word that means nothing to no one -- forced spending cuts of March the 1st. Is it your gut feeling that they will solve the forced spending cuts?
EL-ERIAN: So, my gut feeling tells me that they're going to kick the can down the road again, but the evidence so far, Richard, is that this time around, my gut feeling is proven to be a little bit too optimistic. So, I hope they kick the can down the road, because the US economy cannot take a hit at this point. But it's amazing how dysfunctional the politics have become on Capitol Hill.
QUEST: Mohamed El-Erian joining us from California, and I promise you next time, we'll have a weather forecast for you. You can stand and do the weather forecast as well. You can stand and do the weather forecast as well. Have a good weekend. Good to see you.
Now, still to come on QUEST MEANS BUSINESS, too much capacity, not enough orders. The world's largest shipping group managed to top profit hopes. The chief exec of Maersk, and he's not very cheerful, either, about the prospects for the year. QUEST MEANS BUSINESS.
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QUEST: The chief executive of the Danish shipping giant -- it's actually called AP Moller-Maersk, you and I know it just as Maersk -- he warned his company faces a tough year because global growth is stalling and his ships are carrying goods -- or not, as the case may be -- around the world.
Maersk is that bellwether. It shows us what's happening in international trade. The numbers may have been better than expected, but a performance that's not likely to be repeated in 2013. Remember what you just heard about the economic forecast. Now listen to the chief executive Nils Andersen, who says there's too much capacity, too few orders, and it's all very complicated.
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NILS S. ANDERSEN, GROUP CEO, MOLLER-MAERSK: We have too much capacity and we are seeing, obviously, much lower growth and demand than we are used to. So all-in-all, we're looking at some pretty tough years, at least the next coming two years ahead of us.
QUEST: And all this at the time when Europe must -- you're bringing online even larger ships and the largest ships in the world. So, because of the long investment and lead time, pardon the pun, you really are caught between the devil and the deep blue sea on this one.
ANDERSEN: I think that may be pushing it. We have always taken pride at AP Moller-Maersk in going ahead and showing the world how we could become more fuel-effective, how we could reduce the CO2 emissions that we give as a shipping industry.
So, I think we're not sad that we placed those orders, and we will actually, given the market developments, what we will see them is as fleet renewal. We'll phase them in gradually over the next two and a half years, and we will simultaneously take smaller vessels and old-fashioned tonnage out of the trade.
QUEST: Europe is still in recession. The US is going to slow down. China is slowing down. And your poor ships are dragging themselves around the world, not necessarily begging for a cargo, obviously, but you are representative of a global slowdown in trade. You're feeling that effect.
ANDERSEN: We are feeling that effect, and that's also why we understand that 2013 will not be any easier than 12, but have in mind, we have delivered a profit in the container line in 2012 that even started with a record big loss in the first quarter, very slow growth in the first half, and a standstill in the second half.
So, we don't believe that 13 will be any more difficult than this, and if the industry manages capacity reasonably, we get the costs down, we're cautiously optimistic we will be able to make a profit that is slightly above or above the 2012 result also in the shipping business.
QUEST: Which part of the world is giving you most heartache?
ANDERSEN: We do forecast recession or at least no growth in the first half of 2013, but let's not forget the investments we made in the last couple of years in shipping have been directed primarily towards the African and the South American, the Latin American markets. So, we are diversifying away from the Asia-Europe trade.
And there are some positive points in that trade as well, because now we're seeing with the reduction in labor cost in Southern Europe, we're actually seeing a peak of an export out of Southern Europe in particular towards Asia. We see China being focused on boosting domestic consumption.
So, I think there's some things to be quite optimistic about also in -- the Asia-Europe trade when you look a little bit further out in the future.
(END VIDEOTAPE)
QUEST: The chief executive makes some valid and strong points on the question of growth, and Maersk is the world's biggest shipping company, with a fleet of more than 500 vessels, 2 million containers.
Put this in perspective, and why we listen so carefully. Last year, I visited Maersk shipping in Singapore and found out what it takes to make the massive operation work.
(BEGIN VIDEOTAPE)
QUEST: They call this part of the ship "monkey island," and from up here, you see the size and scale. It's really quite simple: you take the containers from Europe and you drop them into Singapore, and then you take the containers from the dockside and put them back onboard. Oh, and you've got to do it all as fast as possible.
STOICA MARIAN, SECOND OFFICER: We don't waste time. We do our best to finish in time and to leave for the next port. Small problems, you always fix them.
QUEST: How many containers will you change here in Singapore?
MARIAN: 6,500 moves we have.
QUEST: What do you do if the one you want to take off is right at the bottom?
MARIAN: Normally, the planning is done in such a way that the container you have to discharge has to be on the top, so there's no inconvenience. But if there is any inconvenience, there's a number of vistas you have to do before you can take the one on the bottom. And of course, these vistas are not very good, because it costs money.
BJARNE FOLDAGER, MANAGER FOR SINGAPORE, MAERSK LINE: The longer time the ship's on port, that means that we have shorter time out at sea. Shorter time at sea means we need to sail faster, and that means more fuel.
QUEST: How much does this ship cost?
FOLDAGER: The value of the goods aboard the ship is probably a higher value than the ship itself.
(END VIDEOTAPE)
QUEST: Let's stay with the shipping theme for tonight's Currency Conundrum. The Pieces of Eight was the first widely-used international currency, and something bearded pirates were all keen to pillage. The Conundrum tonight: was the Pieces of Eight minted in Spain, Portugal, or the UK? The answer later in the program.
Right now, the dollar's holding steady against the euro and it's gaining around of a third against the yen. Those are the rates --
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QUEST: -- this is the break.
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QUEST: Mining shares helped to lead European markets higher tonight, you saw that earlier in the program. It's been a turbulent week for the sector. Nine people were hurt during the violence at a platinum mine in South Africa on Monday. And yet, plenty of investors are still bullish on Africa's longterm potential. It being Friday, we have a moment or two to discuss these issues.
John Hyman is the chairman and chief exec of Renaissance Capital, an investment bank focused on emerging markets. Good to have you with us tonight.
JOHN HYMAN, CHAIRMAN AND CEO, RENAISSANCE CAPITAL: Thanks for having me.
QUEST: Why do you remain? I mean, I know you're based in Russia and in Africa, so you have a certain vested interest in it. But why Africa? Because isn't it a case of promise but never realized?
HYMAN: Absolutely not. We believe, and we've seen over the last decade, Africa's had the highest growth in the world. Currently, of the 21 fastest- growing nations in the world, 11 are African./
QUEST: So, what's your concern when you talk about that, though?
HYMAN: Well, there's always concerns, and every night, you worry about a whole host of things. There's a macro concern, and you talked a lot and your friend from PIMCO that was on presented a pretty pessimistic view of the world economy.
So far, Africa has been able to generate a lot of its growth momentum internally, but you worry if there's an implosion in the world, we've seen no one is removed from that.
QUEST: When you see these sort of numbers and you hear what happened with the Fed and you look at the way the markets are so volatile, it's more difficult, surely, for you to attract the capital and the investment for Africa, or not? Which is it?
HYMAN: No, it's definitely more difficult to attract the capital for Africa, but what I would say is so far, the growth in Africa that I've talked about has been generated by internally-driven growth. So, if you look at the African banking system, right? Debt-to-GDP, household debt-to- GDP is way, way, way below anywhere else in the world. So, there's an intrinsic growth rate.
If you look at the profitability of African banks, the best in breed banks are achieving returns of equity of 25 to 30 percent. Something that every bank CEO in Europe or America would only dream of. And this is all being done without foreign capital.
QUEST: OK. But there's always the question, of course, of transparency. I know that something -- I'm going to use the "corruption" word, but I -- and I can almost hear viewers in African saying, "oh, you always say that, Richard, you always bring that up." Is it your gut feeling things are getting better or worse, or is it a mixed picture?
HYMAN: No, things are definitely getting better not worse. Of course, it's a mixed picture, but if you look at, for example, the surveys of the ease of doing business and you look at how much progress the Africans have made, it's astonishing.
QUEST: John, thank you very much, indeed, for coming in, Friday night, thank you very much.
HYMAN: Thanks a lot.
QUEST: I appreciate it. John Hyman joining me there from Renaissance Capital.
When we come back in just a moment, Italy has a serious decision to make, even with a comedian in the mix. Coming up next, the candidates for the Italian prime minister, we will map out the possible path to victory. It's QUEST MEANS BUSINESS after this break.
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QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, the news always comes first.
A magistrate has granted bail to the South African track star Oscar Pistorius in the amount of $112,000. Pistorius, who is accused of killing his girlfriend, must report to police every Monday and Friday. The magistrate said the prosecution had failed to make its case that the Olympian was a flight risk if bail was granted.
Tensions are on the rise in the West Bank where hundreds of Palestinians have been clashing with Israeli forces on Friday. The protesters are demanding the release of hunger strikers being held in Israeli prisons, and Israeli forces reportedly fired teargas and rubber bullets to disperse the crowds.
Leaders from Syria's opposition coalition have been meeting in Cairo for a second day and have been talking about forming an interim government. Members of the opposition say a new government is important, and Thursday's bombing in Damascus is another sign that the al-Assad regime does not have a handle on security.
Japan's prime minister, Shinzo Abe, has held talks with President Obama at the White House, where they discussed actions against North Korea and trade links between Japan and the US. After the meeting, Mr. Obama warned forced spending cuts in the US will slow down the economy if they come into effect at the end of the month.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The overall impact to the economy will be to slow down the recovery, and not only may there end up being direct job loss, but because the economy is softer, it also means that we're not going to be driving down unemployment as quickly as we should. So --
(END VIDEO CLIP)
QUEST: This weekend Italy is set to choose the leader whose task it will be to bring the country out of recession and continue the reforms demanded by the European Union.
Polls open this Sunday and Italians have been handed a colorful palette, a varied cornucopia, a variety of candidates. Now I promise you for a Friday, this is complicated. Bear with me. I promise you. Here we go. The contenders: so we have the -- we have the Chamber of Deputies and we have the Senate. And so when you need a majority of 630 of deputies and then a chamber of 315 Senate.
Now Pierre Luigi Bersani is the Democratic Party from the center left. He keeps austerity; he keeps pro-growth and all of those.
Silvio Berlusconi, the former prime minister from the People of Freedom, center right, he would scrap the property taxes, being prime minister three times before.
Mario Monti is the civic choice center. He is responsible for most of the current austerity.
And then Deputy Grillo, the five-star movement populist. He's a former comedian and actor, and he's anti-big business; he's the -- and he would like a referendum -- excuse me -- on the euro.
So the only thing I've promised you here is that there are many possibilities and lots of difficulties. Let's start with Bersani.
So Bersani gets a majority in the Chamber of Deputies and, as is perhaps possible, he gets one in the Senate. That would be arguably the most straightforward.
But assume he doesn't get enough deputies in the Senate to actually get a majority and he has to start shopping around for coalition. Now we're in coalition territory. Well, first of all, it would be Mario Monti, who perhaps would join him because Monti, of course, similar prospects; austerity continues.
But if he's still not got enough, you end up with Silvio Berlusconi. Now the possibilities there, unlikely, bearing in mind the animus. But it is possible.
And finally if all of this isn't quite working out as it was intended, you have Grillo, who is arguably going to demand some sort of price for going into coalition.
Finally, if none of them manage to get a coalition together, then eventually, of course, the Italian president has no choice but to call fresh elections and we're back to square one.
Whoever wins will take control of a country enduring its longest recession in 20 years, double-digit unemployment. As Ben Wedeman found out, this bleak new reality is putting pressure on some of its oldest industries.
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UNIDENTIFIED MALE: That's lifting up.
BEN WEDEMAN, CNN CORRESPONDENT (voice-over): Clay in the hands of an artist slowly becomes a work of art in the Umbrian village of Deruta.
UNIDENTIFIED MALE: This is so difficult.
WEDEMAN: But he makes it look so easy.
WEDEMAN (voice-over): For 25 generations, the family of Ubaldo Grazia has been making and selling luxury ceramics. It's a family business with a colorful history, going back hundreds of years.
UBALDO GRAZIA, U. GRAZIA MAIOLICHE: The apprentice and the women, this is the (inaudible). Look, recognize. That's my grandfather on the (inaudible).
WEDEMAN: He looks like an artist.
GRAZIA: Oh, yes, Grand (ph), he was a womanizer (ph).
WEDEMAN: A womanizer, too.
(LAUGHTER)
WEDEMAN (voice-over): Times have turned tough here since the start of the global economic crisis. The factory's most important market for almost 100 years has dried up.
GRAZIA: From Los Angeles, July 1926. Look, our from Los Angeles, California, Tony Duaio (ph), 1926.
WEDEMAN: It says, Blake (ph), Washington, D.C.
GRAZIA: Washington, D.C. Yes, unbelievable, unbelievable.
WEDEMAN (voice-over): Ubaldo can drop names.
GRAZIA: (Inaudible).
WEDEMAN: Oh, really?
GRAZIA: Yes. (Inaudible) friend of Paul Simon (ph). (Inaudible).
WEDEMAN: Of Simon and Garfunkel?
GRAZIA: Simon and Garfunkel.
WEDEMAN: OK. So Mel Gibson, Simon and -- Simon, Paul Simon. Who else?
GRAZIA: This is (inaudible) George Clooney. Look.
WEDEMAN (voice-over): High-end stores in the U.S. have stopped placing orders and Ubaldo has had to cut his staff from 75 to 15.
Italy is just days away from general elections, reviving the ailing economies -- topic number one -- but faith in politicians is low.
WEDEMAN: Now I wanted to ask you, you know, Italians are famous as artists, as creative people.
GRAZIA: Very creative, yes.
WEDEMAN: Are your politicians as creative as your artists?
GRAZIA: It could be, but no, no.
No.
WEDEMAN: Why? Why? I mean, so in -- so many smart people in Italy. What --
GRAZIA: Oh, I know. I know (inaudible). But when the people got just working for themselves to take advantage of their position. I mean, we lost everything. We have to be a good citizen to be good politician.
WEDEMAN (voice-over): Recent generations of the Grazia family have leaned toward the left. Ubaldo says he'll vote for the center left Democratic Party.
GRAZIA: In this factory, we used to have (inaudible) instead of the (inaudible). We used to have a gym.
WEDEMAN: Palestra (ph).
GRAZIA: Palestra (ph) for the workers. They had showers. At home they even didn't have the bathroom. But they had showers in the factory.
WEDEMAN: Wow.
GRAZIA: This means to be socialist. (Inaudible).
WEDEMAN (voice-over): Italians are famous for their ability to thrive in adversity, political and economic. And despite the hard times and his 73 years, Ubaldo isn't giving up or slowing down.
WEDEMAN: Anybody painting now?
GRAZIA: Of course. Let's (inaudible). Let's go.
(Inaudible).
WEDEMAN (voice-over): A family's centuries-old legacy is at stake -- Ben Wedeman, CNN, Deruta, Italy.
(END VIDEO CLIP)
QUEST: Our team is in Rome and in Italy coverage the elections; the results when they are announced on Sunday.
Talking of results being announced on Sunday, gosh, that was smooth, if ever it was one.
The Oscars are on Sunday. Now, look, if you haven't got your invite, you're not going. Never fear; our QUEST MEANS BUSINESS Movie Awards are even closer. They're after the break.
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QUEST (voice-over): The answer to the "Currency Conundrum" tonight, you're looking at the piece of eight, the first widely used international currency. So where did it originate?
The answer, Spain. Peso fuerte (ph) was worth eight real, hence the name pieces of eight.
(END VIDEO CLIP)
QUEST: Welcome to the red carpet. On Sunday, amid a flurry of glitz and glamor, the Academy Awards will recognize excellence in filmmaking. Here on QUEST MEANS BUSINESS, we're a little more hard cash about it. We're a little more concerned with who made what. There are nods to the most profitable pictures, according to boxofficemojo.com.
This year's award for the highest grossing Oscar-nominated movie goes to "Life of Pi." Within seven weeks of its release, this visual epic had raked in nearly $400 million at the box office, more than double of any of its rivals for best picture.
Meanwhile, the film that has the best average daily gross is "Les Miserables," the adaptation of the musical sensation, $12 million a day since its Christmas release.
And perhaps what investors will love most of all, the biggest return on investment, "Beasts of the Southern Wild." Compared to its bigger budget competitors, it's proving to be the nominee with the biggest bang for its buck so far.
The film's taken in more than six times its $1.8 million budget -- $1.8 million. They probably couldn't even have bought the trailers for these two for that. And that's not counting its foreign earnings.
Join me as we go to Hollywood itself. CNN's Nischelle Turner is not accepting her award tonight personally. She joining me from Los Angeles.
All right. I've got my red carpet; you've got the real thing. This really is the big moment for the industry.
NISCHELLE TURNER, CNN CORRESPONDENT: Absolutely, and I'd like to thank Richard Quest for giving me this award and teaching me everything that I needed to know about money. Thank you to the Academy also.
What, this is hilarious, Richard. I love this award show that you're doing. And you're right. You know, in politics, they say there is that post-debate bounce, where usually you'll see a candidate get a little bit of a bounce after they have a debate, whether they won or they lost.
Well, there is definitely an Oscar bounce with the movies. And you were talking about some of the movies that have made a good return on their investment. Another movie, "Amour," that's nominated for Best Picture. Before it was nominated for an Oscar, it had only made $400,000.
Now, Richard, it's made $4 million to date. So talk about an Oscar bounce, that's one for that movie as well.
QUEST: And it is my great pleasure to thank Ms. Turner in Hollywood.
Thank you and I know whatever you're wearing will be sparkling. And we might (inaudible) some real diamonds as well.
Good to see you; have a great night at the Oscars.
Jenny Harrison is at the World Weather Center now.
Jenny, back from -- back from the economic forecast, now we really need to know about the real storms.
JENNY HARRISON, CNN METEOROLOGIST: Yes, we do not a good picture here, either, Richard, as usual I'm going to start you off in the U.S. Now Wichita in Kansas, 36 cm of snow yesterday. That was the second highest amount of snow ever recorded in a one-day event.
The big storm system bringing all that snow, it's continuing to work its way across the Midwest and eventually up towards the Northeast. We've got snow in the north. We have heavy rain across areas of the South in the last few hours.
You can see some of these snow totals, not just that ice as well over a centimeter in Batesville in Arkansas and that is vile when you have the ice; you literally can't do anything. Of course, again, it brings down the power lines.
We've got a grand stop in Chicago right now, but expect to see more delays at the airports in the Northeast as we go through the next couple of days. The system will work its way up the East Coast and to the north, where we have the snow, we have that horrible mix of the two as well. And we could be seeing as much -- get this -- as 15 to 46 cm of snow up into the far Northeast into New England.
The worst of the weather Saturday evening to midday on Sunday, and for example, D.C., Philadelphia, New York City, mostly rain there, but Boston is really in this line of the mix of the heavy snow and the rain, some ice as well. And so that's why we could see some travel disruptions also because the winds will be on the increase. So that could cause the problems.
We've got the warnings in place, the winter storm warnings and watches. They will have spread across into the Northeast as we head into Saturday. And as I say, the storm working its way eastwards.
What I can say is that they're in California, Los Angeles, some very nice weather conditions for the Oscars, very nice and warm and sunny on Sunday, the rain taking a while to clear, though, across areas of the South, but not cold in the Southeast, 17 in Atlanta, -1 in Chicago. And there is that 17 in Los Angeles on Saturday. And even warmer on Sunday, Richard.
QUEST: Jenny Harrison at the World Weather Center, it's going to be cold on your Saturday, then; a bit cold on mine and cold in Poland, where I'm heading this weekend. We thank you for that.
We've talked about the movies tonight. The movies, of course, may be all about red carpet. But on this program, nah, it's all about making the green stuff.
And that's 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.
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ROBYN CURNOW, CNN HOST: We're in central Malawi. I'm Robyn Curnow and you're watching MARKETPLACE AFRICA.
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CURNOW (voice-over): From the plush green hills of Malawi to the busy streets of the western Cape, South Africa is home to the largest number of African migrants on the continent, which affects the country's economy, but not necessarily in a negative way.
Inside this shoe shop located in Cape Town, you'll find a colorful display of handmade shoes for both men and women. And if you don't see a pair that you particularly like, you can place a special order.
MAMADOU DIOMANDE, SHOEMAKER: (Inaudible) shoe like this. And I measure your feet and (inaudible) no (inaudible) the length of your feet and the wideness. And I (inaudible) couple of days when you come down and (inaudible).
CURNOW (voice-over): Mamadou Diomande, who's from the Ivory Coast, said he learned to make shoed by first learning how to repair them. Once he improved this skill, he then began making shoes by hand and ultimately decided to specialize in leather.
But Diomande says there weren't a lot of opportunities in the Ivory Coast to work with leather, so he packed up his belongings and moved to South Africa in the late '90s to pursue his passion.
DIOMANDE: I think I'm -- I (inaudible) Ivory Coast, fled (ph) to South Africa in Johannesburg for any opportunity you can make you a better life. So I come to realize I did possess some (inaudible) for people, not (inaudible) shoes. But I found out, OK, only the job can make me happy is the shoes.
CURNOW (voice-over): This shoemaker is part of a larger group of African migrants who come to South Africa for economic reasons. But Diomande is a documented worker. He says he deals with the same pains and struggles as other small business owners in South Africa.
DIOMANDE: Yes, this is a full detail (ph).
It is quite challenge if you go to (inaudible) place for some time you are work (inaudible). You just pay the rent, pay other people, pay for the material. You don't have nothing. And you continue. If you want it, if you love it, you continue and people will appreciate what you do. End of the day, you get something from that.
CURNOW (voice-over): (Inaudible) is this business owner, Mike Kaskudha. He runs this barber shop and he's lived in South Africa for nine years. Kaskudha said he moved from his home in the Democratic Republic of Congo to find work and a safer place to live with his family.
MIKE KASKUDHA, BARBER: I left DRC I think things were like fighting and doesn't create opportunity for the people to be. So we need peace. You have to go where you feel like you can be in peace. (Inaudible). That's why I came down here.
CURNOW (voice-over): Do it for yourself?
KASKUDHA: Yes. With my family, of course. When I got, my family got. It's not just me.
CURNOW (voice-over): Kaskudha's story is a familiar one of those who flee to South Africa to escape war and violence. But because of South Africa's backlog of asylum applications and past immigration policies, many refugees say they aren't able to legalize their status and often find work in South Africa's informal economy.
Undocumented workers who don't pay taxes and are not entitled to basic benefits. They usually work in low-skilled jobs that pay lower wages than those found in the formal economy.
Excluding agriculture, the South African Labor Force Survey estimates there were 2.1 million people in South Africa's informal economy in the first quarter of 2012, compared to 9.5 million, the country's formal sector.
But many South Africans, especially shopkeepers, feel that refugees who work at South Africa's informal sector are stealing the economic opportunities by taking their customers, revenue and income security. These attitudes often lead to issues of racism and xenophobia.
In 2008, an influx of Zimbabwean refugees caused a wave of xenophobic violence in South Africa that resulted in more 50 deaths. Many South Africans blame these immigrants for contributing to the country's social problems, such as unemployment, crime and a lack of housing.
But refugee rights advocate, Ronnie Ammett (ph), argues that instead of stealing economic opportunities, refugees and asylum seekers are actually contributing to the economy by creating jobs.
RONNIE AMMETT (PH), REFUGEE RIGHTS ADVOCATE: A lot of them are really self- sufficient. So I think it's a misperception that they're competing directly with South Africans for jobs, because a lot of them are street traders; a lot of them set up their own businesses. They set up (inaudible) and other types of businesses and even employ South Africans sometimes.
CURNOW (voice-over): Retail makes up the largest working group in South Africa's informal economy, followed by community and service jobs. Analysts say the number of people entering South Africa's informal workforce continues to rise. Ammett (ph) attributes the growth to South Africa's urbanization, infrastructure and stability.
AMMETT (PH): I think there's very little evidence that shows that they are a burden. And in fact, in contrast to other countries where they do actually provide support for refugees, South Africa doesn't provide any support.
I think a lot of asylum seekers come to South Africa because they have an urban refugee policy. So they can come here and rather than being in a refugee camp, they could work.
CURNOW (voice-over): There's a good deal of debate on whether or not to formalize South Africans' informal economy. Some human rights advocates say the government should focus more on providing better benefits and critical job training to informal workers, which could help drive down polity and improve economic growth in the country.
But while the discussions carry on, many are creating their own opportunities.
KASKUDHA: I just had to do things for myself, because I want to get my money the way I want it. Everything I make, it's mine. And anytime I want to close, I close. Anytime I want to open, I open. No one drives me. So I'm very happy working for myself and I get more money.
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CURNOW: Millions have marched for it; pop stars have sung songs about it. And governments are sometimes judged by it. Up next, why one economist believes international aid keeps Africa poor.
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CURNOW: Human nature isn't that you see or hear of somebody who's less fortunate than yourself and you want to help out with clothes or food or money. Western governments have for decades been doing exactly that, giving handouts to African countries such as Malawi.
Well, our guest on "Face Time" this week is Zambian economist Dambisa Moyo, and she's been arguing for years that international aid stifles Africa's development.
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CURNOW: The aid debate is so -- it's so different, isn't it?
DAMBISA MOYO, ECONOMIST: Well, I mean, so much has happened in the last five years. I mean, the -- whether you're in Africa, South America or Asia, nobody talks about aid anymore. I mean the policymakers themselves are going out and issuing debt in the market. My own country, Zambia, did a fantastic bond, $750 million, 10-year bond last September.
And you know, the discussion is so much more about job creation and investment, which is such a fantastic story. And it was obviously partly to do with the fact that the traditional donors are having a financial problem, fiscal problem in their -- on their balance sheets. So they just don't have the capital anymore to hand out cash in the way that they did in the past.
CURNOW: How do you see the trends playing out in the next decades?
MOYO: So I'm an eternal optimist. So I'm probably the wrong person to ask, because I do believe that the structural and fundamental structures of Africa right now are poised for a very good few decades.
If you look at an economy through the lens of capital, which is basically money; labor, which is basically, you know, how much -- how many people do have and what skills do they have; and productivity, which is just how efficiently do they use capital and labor.
This trend is very clearly in favor of Africa. We've got a very solid fiscal story, debt-to-GDP ratios in Africa today at the historical (ph) level are nowhere near the burdens that we're seeing in Europe and the United States.
The labor story is very positive; 60 percent to 70 percent of Africans are under the age of 25. So a young population, dynamic, that needs to be leverages. So definitely we need to invest in skills and education to make sure that we get the best out of this young population.
And then in terms of productivity, the continent is a great absorber of technologies and all the things that can help us become more efficient. And therefore, these three key drivers, capital, labor and productivity, help to spur economic growth.
Now is it going to be smooth sailing? Of course not. There will be volatility. But I think the real investors in Africa will be able to make a delineation between risk and uncertainty.
CURNOW: And it's all about Africa's commodities, Africa's resources, and that's not necessarily just the minerals. It's land, water, isn't it?
MOYO: So that's a brilliant question because actually the answer is no. I think it's really about the structural things that I mentioned -- capital, labor and productivity. Why do I say that? Let's take a look at the African stock market. There are about 20 stock exchanges in Africa and about 1,000 stocks that trade in Africa.
Eighty-five percent of them are non-commodities. We're talking about banking; we're talking about insurance; we're talking about retail; we're talking about consumer goods, logistics companies, telecommunications. Those are the stocks that are on the African stock market.
CURNOW: In a way, you've become the poster child of Africa's success story. You're flying around the world, waving the flag.
Do you feel like that? Do you feel a responsibility to it?
MOYO: Well, I suppose I -- for me, I feel a responsibility to tell the truth. This is a great continent. I went to primary on this continent, secondary school, university. I've worked on the continent. And I think that's a great disservice that, for whatever reason, people have usurped an imagery of Africa that is absolutely incorrect.
They focus on war, disease, corruption and poverty. That is not all about Africa, you know. And I think it's really essential -- (inaudible) turned the corner. We need to take that responsibility as governments, as citizens, not just Africans, global citizens to say that's actually not true.
There are more poor people in India than there are in Africa, more poor people in China than there are in Africa. But somehow, there's a stigma for decades that's been associated with the African continent that is completely unjustified. And it's that that I find objectionable.
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CURNOW: That was Dambisa Moyo. Now you can see that interview and many others on our website, which is CNN.com/MarketplaceAfrica. I'm Robyn Curnow. Thanks so much for watching. We're in Malawi. And please do join us again next week at another African marketplace.
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