Return to Transcripts main page

Quest Means Business

Unemployment Warning; Uneven Recovery; Bleak Eurozone Data; Greek Strikes; Tale of Two Earnings; Wall Street Ethics Study; GSK Corruption Claims; Dollar Weaker; Cartel Boss Captured

Aired July 16, 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: It is a scourge that still scars the world. Tonight, the OECD tell us unemployment will be a menace through 2014.

Also, Greece goes on strike as more austerity looms. We're live in Athens tonight.

And Goldman's 100 percent sweep. A stellar second quarter, and the bank's profits double.

I'm Richard Quest. I mean business.

Good evening. The scars of global unemployment and the crisis we are facing, far from being healed. That's the OECD's warning. It says we should expect another 18 months of pain from what it's calling the "jobless generation."

The report says unemployment will remain high this year, and worryingly, it talks of big, widening disparities between the countries, revealing the highlight that unemployment in the US is projected to fall below 7 percent by year's end. Compare that to the forecast of nearly 28 percent unemployment in Spain and Greece.

In short, the report highlights the pain from the crisis has not been spread evenly around the world. If you join me over in the library, you will see what I mean.

The Organization for Economic Cooperation and Development, the OECD, Paris-based, according tot he report, there are winners and there are losers. Those who are doing better than the rest. And that's not necessarily at the losers' expense. It is not a zero-sum game.

Among those doing better, the winners: the United States and Germany, 7 percent unemployment or heading down in that direction, 5.3 percent unemployment in Germany, and there's a continual boost to the economy.

Large emerging economies have taken advantage of it, and older workers, too. Interestingly, older workers have fared better, even at a time when people have bee made unemployed.

So, those are the winners. What about on the losing side? The losers? The rest of the eurozone. You know that unemployment numbers over 11.5 percent, 12 percent, and possibly heading even higher, over 12 percent. Low income workers, young workers, also borne the brunt of the crisis.

So, this is the situation, winners and losers, and a crisis that will last until at least 2014. With a call for major structural reform in certain countries to help bring down unemployment. The OECD -- I put it to the chief economist, Pier Carlo Padoan, that unemployment is going to be the scourge of the developed world for the foreseeable future.

(BEGIN VIDEOTAPE)

PIER CARLO PADOAN, CHIEF ECONOMIST, OECD: Well, you're not far from the truth. It's 48 million people unemployed, out of work, in the OECD area. But of course, variations.

Perhaps what is most striking is that this is concentrated in a number of southern European countries, and most worrying, it is extremely high among the young people, and this is bad for now, it's bad for the future if we don't bring those people back into work.

QUEST: The issue, though, of course, when you look at the United States, where you point out unemployment has been falling and will continue to fall, and Germany will continue to fall. What are they doing right that the others need to do?

PADOAN: Well, the US are doing -- have been doing right what should have been done right in some other parts. They have fixed their financial system, which means that stimulus coming, especially from monetary policy, is producing results in terms of higher growth and more jobs.

In Germany, on the other hand, what they have done is to adjust their structural labor market policies before the crisis, so when the crisis struck Europe, Germany was better prepared to deal with employment.

QUEST: The problem -- looking at those who have been most affected, the young have been affected, those with low skills, low incomes. Perhaps those on short-term insecure contracts. One's not really surprised that they have been hardest hit, are we? They're the ones who are always hardest hit in a crisis like this.

PADOAN: You're definitely right. The problem is also of unfairness of the benefits and costs of this crisis. And one of the challenges, especially in Europe, is exactly to eliminate this separation between those that are too protected and those that are too little protected -- have too little protection. And especially the youth, which fall into the second category.

So, we need to change rules that facilitate entry of job markets, especially by the young people and the low-skilled.

QUEST: Europe has always had a higher level of unemployment than, say, the United States. If we take, for example, at its best point before the crisis, it was almost higher than it is now in the Untied States, which is trending downwards and heading lower. So, fundamentally, there's no room, really, for optimism on the European front.

PADOAN: Well, there's room for hope. The problem in the European front is to change the state of expectation through appropriate policies. I agree that results will take some time to materialize, but you have in Europe to change around the trend, including -- or I would say especially - - in the employment front.

You have to give hope to young generations. And this will take time, but Europe will succeed. This is my -- my hope and my conviction.

QUEST: Do you believe, sir, finally, that European leaders -- and let's face it, all right, there's been a summit in France, there's been a summit in Germany, there's been a summit in Italy. Not much has come from any of it, to be frank and honest. Do you believe there is the sense of crisis that there needs to be?

PADOAN: The sense of crisis, unfortunately, goes up and down. It is, of course, very high when there is a market pressure which is pressing, not like now. So, you have to combine market pressure with the fact that political leaders respond to their election cycles, which are different across Europe.

And of course, that decisions in Europe require 28 countries to agree, or 15 in the case of the euro area. So, this is, other things equal, a very difficult challenge.

(END VIDEOTAPE)

QUEST: That's the chief economist of the OECD, and if you needed further evidence of the difficult situation facing Europe at the moment, the latest numbers suggest the economy in Europe is still struggling. Here at the super screen, I'm going to show you the evidence from the factory floor.

We had a variety of evidence. First of all, today we got import numbers which came in. They were down 2.2 percent in May, according to Eurostat. Exports were also down. They were down 2.3 percent. And new car sales, they were down 5.6 percent.

Overall, if you take the totality of figures, the situation in Europe continues to show deep, worrying trends. Look at the Germany ZEW Indicator, down 2.2 percent. The reasons are, as we know, they are austerity, they are weakening in other economies and, ultimately, it's on the exports and the import front, it's a reflection of the weak nature of the European economy.

In Greece, where youth unemployment is above 60 percent, there's a major general strike. It's the third so far. The 24-hour walkout has affected everything from garbage collection to flights. Elinda is in Athens for us tonight. Another general strike. What do they hope is going to come out of this one that hasn't come out of the previous ones?

ELINDA LABROPOULOU, CNN INTERNATIONAL CORRESPONDENT: Well, I guess it's a question of not having very much to lose at this point. People are gathered here outside parliament.

What they're doing now is they're holding what they call a solidarity concert. Different artists will come in and perform throughout the night just to show their support of the people who are likely to lose their jobs if the measures tomorrow are voted in.

These are part of the measures that need to be voted in if Greece is to get its next bailout tranche, so people are gathered here to day just to partly say enough is enough, enough with austerity, and also just to express their fear about the fact that their jobs are on the line.

Most of the people here are from the civil sector, and so are most of the people that took to the streets today. It is one of Greece's main issues. Greece has an extremely bloated civil sector. It needs to cut down. It's something that the Greeks are seeing increasingly.

For example, last year, only about 40 percent of the people supported the idea of a smaller civil sector. Now, about 60 percent do. And as a result, they're trying to do something to hold their jobs while they're losing support from the private sector, which is no longer --

(CROSSTALK)

QUEST: All right, Elinda, let me jump in here --

LABROPOULOU: -- interested in --

QUEST: Let me -- let me jump in here, if I may. Forgive me. The situation in Greece -- we've talked unemployment, we know it's in the high 20s, we know youth unemployment's in the high 50s -- but the sort of riots and the sort of battles that we've seen in the past have subsided. So, are the people in Greece just resigned to their fate now?

LABROPOULOU: Well, it seems that the people in Greece are seeing that there's very little other options for them. It seems that they realize that some of these reforms must go through, that Greece needs to privatize some of its utilities, that it needs to find ways, effectively, to promote growth, because without growth, it can't do anything.

The economy continues to be shrinking. It's been going against all forecasts that had seen it coming out of recession sooner --

QUEST: All right.

LABROPOULOU: -- than it's likely to by now. So, they're partly seeing that these cuts are necessary. But what they're not seeing is what's going to happen to them, because obviously, with unemployment so high, as you understand, the people who lose their jobs are very unlikely to find anything in the near future.

QUEST: Elinda's in Athens, where the concert is -- or at least the protest concert is underway, joining us tonight.

After the break, a golden quarter for Goldman. The Wall Street giant's results easily beat the Street, but it's a tale of two earnings, and we are live in New York after the break. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Goldman Sachs is shining, Coca-Cola fizzled. Both companies reported results, and they tell two very different tales of the second quarter.

The investment bank Goldman announced giant profits doubled from a year previously -- doubled. It's almost $2 billion in Q2. Coca-Cola --

(LOSING BUZZER SOUND)

QUEST: Coca-Cola sales saw a slump. And interestingly, Cola blamed the cold weather for depressing sales during the period.

Let's talk about the stories. Maggie Lake is in the super screen in New York and, of course, Zain Asher is joining me as well from the CNN Money set. Start with -- what should we do? Let's do Goldman, bit of Goldman first. Maggie.

MAGGIE LAKE, CNN INTERNATIONAL BUSINESS CORRESPONDENT: Yes --

QUEST: This was Goldman once again powering forward.

(LAUGHTER)

LAKE: Powering forward, Richard, right? That's right, Goldman Sachs, very nice-looking earnings, easily beating expectations, 30 percent rise in revenue. It really beat even the bullish forecasts out there.

Underwriting showed a very nice pick-up, both equities and bonds, but here's where they really hit it out of the park: in their trading unit. But guess what? Some of that trading was trading for their own accounts. You remember what we used to call it, proprietary trading.

So, people are wondering, shares are actually down because people are wondering, can that continue under new regulations? Goldman says it would be in line with all the -- in compliance with all the new regulations, but obviously, investors not so sure.

The other thing I want to point out, Richard, is return on investment, sort of a technical term for how much profit they can wring out from the shares. That's running around 10.5 percent. In the heyday, that was closer to 30 to 40 percent.

So, a great quarter, but questions about how banks, how profitable can they really be in this era of new regulations. So, investors not so sure they can repeat that success of this quarter.

QUEST: Zain -- oh, dear, Coca-Cola. Even the CFO apologized for having to blame the weather for their bad results.

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Yes. They were definitely upset about the results. Coca-Cola did have a tough second quarter. Profit fell 3 percent, and sales fell about 2 percent.

However, it did actually beat Wall Street estimates, but nobody at Coke is certainly celebrating. Coke basically flat-out saying we are not happy with our performance. The company is, of course, blaming its declining profits on slower economies in Europe, Asia, and Latin America. They're saying that's hurting growth.

In their earnings report, Coke says it continues to expect business to be impacted by Chinese economic slowdown. It said --

(CROSSTALK)

QUEST: Well, Zain -- hold on -- what was their reason? Tell me a bit more about this weather business? Why does bad weather mean people don't buy Coca-Cola?

ASHER: Right. So, essentially, when the weather is cold, people sort of tend not to drink Coca-Cola. When the weather is hot, like it is in New York, people sort of go for Coca-Cola. So that is what they're blaming -- they're blaming this cold weather. It was colder in China, colder than usual in China, that is why they're blaming the colder weather for the slowdown in sales.

QUEST: Zain Asher, who is in New York. Carrying on with Maggie Lake on Goldman Sachs, Maggie -- all right. Goldman Sachs has this tremendous Q2. One of their former traders -- bankers is on trial in New York. The whole thing is ethics, ethics, ethics, Maggie.

(LAUGHTER)

LAKE: That's right. When you say Goldman's back to its profitable ways, what does that really mean, and is that something that we should be applauding? A very interesting poll as we yesterday were talking about Fabrice Tourre, a former Goldman on trial. Today, we hear all about the prop trading back.

A really interesting poll out today commissioned by the SEC done by a law firm, great article in the "Times" about it, Richard, polling young bankers. Listen to what they said about how they feel about ethics.

Twenty-three percent said that they'd observed or had firsthand knowledge of wrongdoing in the workplace, twenty-three percent. Twenty- four percent said they would engage in insider trading if they could make $10 million and get away from it.

Twenty-six percent said the pay structure rewarded bad behavior. Seventeen percent said that their bosses would look the other way, even if they knew about insider trading, as long as it was profitable. This is after everything we've gone through in the global financial crisis.

Do you think the culture on Wall Street's changed? If you look at this poll, you wouldn't think so.

QUEST: It reminds me --

LAKE: That's got to be worrying to regulators and enforcement.

QUEST: It reminds me of the old joke. Madam, we're just -- we're not talking about the principle, we're just haggling over the price. When you get the traders basically saying if it's $10 million and dot, dot, dot, dot, and we can get away with it. Are you surprised by these findings, Maggie?

LAKE: I am not that surprised. I would have thought after everything and after the reputational blow -- you have MBA students, as these articles point out, signing ethics code, I would have thought that maybe the younger generation coming into the business would be thinking about doing things a little bit differently.

They almost blew up the global economy. Banks went out of business because of this. It didn't end well for all of them, and yet, they'd still go and do it again. So, you know? That's greed on Wall Street for you, Richard.

QUEST: Greed on Wall Street. Maggie Lake, who is in New York. Now, where can you actually -- do you think the culture has changed? Whether or not it is, of course, on Wall Street or it is in your home market, whether it's the city of London, @RichardQuest.

It's a fascinating issue, as Maggie says, after all we have been through, to still actually have those sort of results. Has the culture changed? @RichardQuest. I will get to read a couple of your tweets. We haven't done it for a long time. We really need to get back to reading some of your views on the program.

As we continue tonight in our evening conversation on business and economics, in China, there are signs a corruption investigation into GlaxoSmithKline could extend to other drug companies, too. GSK is accused of widespread bribery, paying hundreds of millions of dollars in kickbacks. We talked about it on the program last week. David McKenzie reports from Beijing.

(BEGIN VIDEOTAPE)

DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Well, it's an unfolding international scandal that's affecting one of the world's most famous pharmaceutical companies. GlaxoSmithKline is feeling the pressure right now with four Chinese executives detained by authorities, according to state media. They were allegedly part of a bribery scheme that's been running since 2007.

The allegations are that they used travel agents to try and funnel money to secure government contracts and raise the price of the pharmaceuticals here in China. There's also allegations that they skimmed money off third-party contracts to fill their own back pockets.

GlaxoSmithKline has immediately responded to these allegations. They say that they have zero tolerance for any behavior of this nature.

PHIL THOMSON, GLAXOSMITHKINE: These allegations are shameful, and we regret that this has occurred. We will cooperate fully with the Chinese authorities in their investigation and will take all necessary action required.

MCKENZIE: China is by no means the largest market for the global pharmaceutical, but it is a growing and important one, and many pharmaceuticals are looking to China to increase their growth because of an expanding middle class.

Certainly, these allegations and this investigation to point to a wider investigation of the pharmaceuticals market here in China.

David McKenzie, CNN, Beijing.

(END VIDEOTAPE)

QUEST: And so, to tonight's Currency Conundrum. Treasure hunters in the US have discovered 48 gold coins dating back 300 years. The coins had been aboard a fleet of Spanish ships sunk off the coast of Florida during a hurricane in 1715.

Now, what were the coins? Were they doubloons, pesos, or escuidos (sic)? Escudos, even. I'll have the answer for you later in the program.

Well, whatever they were, they weren't dollars. And tonight, the dollar is weaker against the pound, the euro, and the yen, and those are the rates --

(RINGS BELL)

QUEST: -- and this is the break.

(COMMERCIAL BREAK)

QUEST: Mexican authorities today captured one of the country's most sought-after and most brutal drug bosses. He's Miguel Angel Trevino Morales, who's head of the Los Zetas cartel. He was riding in a pickup truck carrying -- extraordinary, this -- he was carrying eight guns, hundreds of bullets, and $2 million in cash. Imagine explaining that to the authorities.

It's a big win for Mexico's president, Enrico Pena Nieto. Los Zetas is Mexico's largest drug cartel in terms of territory. It has operations in 11 Mexican states. CNN's Nick Parker joins us now, live from Mexico City.

Nick, put this into perspective for us. We know on those border towns, we know in areas, it's basically become total and utter lawlessness. So what -- put this into some sort of context.

NICK PARKER, CNN CORRESPONDENT: Yes. Certainly, the area where Trevino Morales was apprehended, which was something like 24, 27 kilometers south of the city of Nuevo Laredo, is an extremely unstable area of Mexico, certainly.

And Mexican authorities had the road that he was apprehended on under surveillance for something like three or four months. So, they were obviously aware that this was a key transit point for him, and I think the geographical base of Nuevo Laredo for Los Zetas has always been an important destination. It's a border city.

QUEST: Right, but --

PARKER: It borders the United States and has a bridge going over to Laredo and has been long a transit point for the trafficking of drugs through Mexico, Richard.

QUEST: Taking out this chap, arresting him, it doesn't cure the problem, so how does it help them? Is this a case of if you cut off the head, the snake dies?

PARKER: That's certainly one sort of -- one argument, I think, that has been made repeatedly over the years here in Mexico. For instance, the previous presidency of Felipe Calderon specifically targeted these big fish, these capos, and he went and actually killed or captured the majority of the people that he did set out to do.

But at the same time, many analysts say that it did fragment -- it fragmented many of the cartels and splintered them. As the head was cut off, it was more like a Hydra, where you saw competing factions within cartels emerge and, in fact, since the drugs war that was launched in 2006, some 60,000 people lost their lives here in Mexico. So, certainly, it did not lead to any reduction in violence whatsoever, Richard.

QUEST: Ultimately, what -- this is the old debate about supply and demand, isn't it? It's about the users in the United States versus the south. So, is there a feeling now in Mexico in any shape, form, or description, one swallow does not make a summer. You got rid of one person, potentially, alleged. Is there a feeling that they aren't making any serious inroads into the war?

PARKER: Well, I think it really -- to coin a cliche, it does remain to be seen. President Enrique Pena Nieto only took office last December, and he did originally try to say he was going to refocus the military strategy towards crime at a local level that is perpetrated by cartels that affects the Mexican population instead of going after these big targets, like Trevino Morales.

So, we're really going to have to see whether Pena Nieto can define what exactly that means. It's still somewhat ambiguous. And certainly, this particular apprehension, as much of a propaganda coup as it is for the administration, is certainly reminiscent of the previous one.

So, were Pena Nieto's plans, for instance, of establishing a gendarmerie with military training to try and revamp the local police forces, this is something that could take years. So, I think it's probably still to early to say, Richard.

QUEST: Nick Parker in Mexico City. When we come back, he's one of the world's most respected economists and he's just stepped down as the governor of the Bank of Israel. We speak to Stanley Fischer about his outlook for Israel, the Middle East, and the global economy. It's QUEST MEANS BUSINESS and it's after the break.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN and, on this network, the news always comes first.

(BEGIN VIDEO CLIP)

QUEST (voice-over): Egypt is moving forward with its political transition. The country's interim president has sworn in dozens of cabinet members on Tuesday. Nevertheless, many Egyptians believe Mohammed Morsy is still the rightful president.

His supporters protested overnight; seven people were killed in clashes. The state-run TV reports 400 people were arrested.

The fugitive U.S. intelligence leaker Edward Snowden has applied for temporary asylum in Russia. If it's granted, Snowden will be able to stay for up to a year. The former security contractor's been hiding at a Moscow airport for the past three weeks.

As you heard a moment ago, the leader of one of Mexico's most powerful and feared drug cartels is now in police custody and facing a long list of charges. Miguel Angel Trevino Morales (ph) was captured early on Monday near the U.S. border. He is the leader of the Zetas cartel, a group named for its ruthless violent tactics.

Authorities in Panama have seized a North Korean ship traveling from Cuba through the Panama Canal. They were tipped to search the ship for drugs; instead, they found military equipment hidden in a cargo of brown sugar. The president of Panama says the seizure contains parts of a missile.

The thousands of people are taking part in peaceful demonstrations in Greece on the same day the country was effectively crippled by a one-day general strike. The 24-hour stoppage has affected everything from rubbish collection to hospitals. The anti-austerity protests came ahead of a crucial parliamentary vote on public sector job cuts.

(END VIDEO CLIP)

QUEST: Stanley Fischer is, without doubt, one of the most respected economists in the world. Now he was deputy managing director of the IMF for seven years. He was also the chief economist at the World Bank too. His former students include the U.S. Federal Reserve Ben Bernanke and the ECB governor Mario Draghi.

At the end of June, Stanley Fischer stepped down as the governor of the Bank of Israel, where he's credited with bringing stability to the country's economy during the global financial crisis.

Mr. Fischer's term also coincided with mass protests against economic inequality in Israel.

Fionnuala Sweeney, who is in Israel, spoke to the former bank governor and asked him whether Israel's low inflation rate would eventually become an issue.

(BEGIN VIDEOTAPE)

STANLEY FISCHER, FORMER GOVERNOR, BANK OF ISRAEL: Well, no central banker will ever say it's going to be an issue in the short to medium term. You have to make sure it doesn't become an issue in the short to medium term.

But as of now, practically worldwide, inflation is relatively low and relatively under control. But these things can change very quickly. So you have to be on guard.

FIONNUALA SWEENEY, CNN CORRESPONDENT: And in terms of security, do you find what's taking place in the Sinai recently worrying?

FISCHER: The direct effects on the Israeli economy of what happens in Egypt are relatively small. The defense effects which you mentioned, the uncertainty about Sinai could be much larger or a concern with the new government probably likely to be better relations, but we don't know that yet.

SWEENEY: You're on record in the past as having said that if there were peace with the Palestinians, that it would give a dividend to the Israeli economy.

Is that something Israel needs, given that the economy seems to be growing quite well, despite the lack of a peace agreement?

FISCHER: I believe that the major benefit from reaching an agreement with the Palestinians would come not from direct trade with the Palestinians or even possibly from direct trade with the rest of the Arab world.

But from reducing the level of uncertainty about what the future of this country holds. We own more foreign assets than foreigners are in Israel (inaudible) this relatively small country. In fact, invests abroad more than people invest here.

That partly reflects the fact that people do want us to have some of their wealth abroad. And they're not investing here. I think we'd get much more Israeli investment in Israel and we'd get much more foreign investment in Israel and the economy could grow significantly faster as the security situation changed.

SWEENEY: Is there anything that concerns you at all as you prepare to leave this post?

FISCHER: Well, there's a developing one which is the global economy is slowing down and we're very dependent on the global economy. And I think that Israeli growth is slowing down. We see it in the data.

SWEENEY: Is there anything for your successor to be concerned about as he takes over?

FISCHER: My successor will have to deal with an economy that has -- is facing more headwinds than I had to face most of the time except during the Great Recession.

SWEENEY: You left the job at the beginning of July. You've had a couple of weeks now. What are your intentions?

FISCHER: I don't know and I won't know for some time. We'll look around; we'll figure out what the possibilities are. I don't know where we'll live. We're going back to New York, where we have an apartment. That will be where I base my search on, our search. And then we'll see. It'll take a while to make a decision.

(END VIDEOTAPE)

QUEST: Stanley Fischer, talking to Fionnuala Sweeney in Israel.

Now this is an emergency locator transmitter, an ELT. They're standard on board all Boeing and Airbus aircraft and U.K. authorities are examining it as part of an investigation into the Dreamliner fire last week. We will explain more after the break.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

(BEGIN VIDEO CLIP)

QUEST (voice-over): The answer to tonight's "Currency Conundrum," what type of coins were discovered in a 300-year-old Spanish shipwreck off Florida? The answer: escudos. These were gold coins first introduced in 1566. The 48 coins now have an estimated value of between $200,000 and $350,000.

(END VIDEO CLIP)

QUEST: U.K. investigators are looking into whether the emergency beacon caused the fire on board the Boeing 787 Dreamliner at Heathrow Airport; the plane belonging to Ethiopian Airlines. The jet caught fire last Friday. It was parked at an empty bay at the time, away from the terminal. There was a technical issue reported on another 787 the same day from Thompson Airways, unrelated.

But this is what the ELT looks like. All aircraft have ELTs, emergency locator transmitters. This is just one particular example made by Honeywell. And they are usually about -- almost always located at the back of the aircraft.

The U.K.'s AAIB, the investigators, says the emergency -- the ELT is one of several components being looked at in detail. The traveling public can be assured we are investigating all possible causes and following up all leads.

Now the ELT in this case was made by Honeywell. It's standard on all Boeing and Airbus aircraft; different manufacturers, but Honeywell make large numbers of them. And in fact, it's not new technology; it goes back to 2005. Honeywell said, "Our ELT products have been certified by the FAA since 2005 and are used on a number of aircraft models. And we've not seen or experienced a single reported issue on this production line."

So let's look at where this is. The ELT is located just about, 'round about here. It's crucial. It's crucial -- obviously, it's (inaudible). It needs to be far away from the front of the aircraft in case of impact, and it is so constructed, the ELT, that it -- will survive impact. It's exceptionally robust and in the event of impact or a crash, of course, then it starts transmitting a signal.

It's powered by non-rechargeable lithium manganese batteries, which, of course, takes the pressure off the lithium ion batteries, which we know are here and here, and which the AAIB have already seemingly ruled out.

But what the big issue will be is why there was so much scorching on the top of the aircraft. And ultimately, ultimately the investigators will have to also look at the carbon fiber skin, the new lightweight carbon fiber skin to see whether that held up in what was, of course, the crisis.

Other aviation news to bring you tonight: and Asiana Airlines is planning to sue that California TV station, KTVU, on its reporting of the plane crash on July that 6th, saying it was demeaning to the airline. As Kyung Lah reports, legal experts say legal action -- now that's an uphill battle in this case.

(BEGIN VIDEOTAPE)

KYUNG LAH, CNN CORRESPONDENT (voice-over): It's now an infamous report, painful to even watch, in the midst of the crash investigation of Asiana Flight 214, San Francisco station KTVU reports the supposed release of the pilot names:

UNIDENTIFIED FEMALE: Sum Ting Wong, Wi Tu Lo.

LAH (voice-over): A jaw-dropping and now obvious juvenile prank. The story made all the more amazing when the next day it's learned the fictitious names were actually confirmed by an NTSB intern. The NTSB issued an apology, as did the TV station.

UNIDENTIFIED MALE: And from all of us here at KTVU, we can only offer our sincerest apology in this case.

PHIL YU, ANGRYASIANMAN.COM: I was like, am I -- is this for real? Am I really seeing this?

LAH (voice-over): Phil Yu is a blogger behind Angry Asian Man. He is, as you might guess, angry, but also incredulous.

YU: This is completely inappropriate, especially because we're talking about a tragedy. People died. People were seriously injured. I almost was bracing myself for the jokes that would come.

LAH (voice-over): And they did come and are still coming. From HBO's "Real Time with Bill Maher":

BILL MAHER, HBO HOST: Now that we know the cause of that Asiana Airlines crash was the pilots flying too slowly, I don't want to hear another word about me doing Asian driver jokes.

LAH (voice-over): It speaks to the way Asian Americans are depicted in American pop culture, often like this character from "The Hangover."

UNIDENTIFIED MALE: Now that's the point. It's funny.

LAH (voice-over): Which may help explain Asiana Airlines' reaction, in a bizarre turn, the beleaguered Korean company says the first lawsuit post-crash will be their own, against the TV station that aired the erroneous report.

The airline tells CNN, "After a legal review, the company decided to file a lawsuit against the network because it was their report that resulted in damaging the company's image."

If officially filed, some lawyers say that lawsuit will be hard to prove in court. And the move's provoked a backlash on social media, roundly calling Asiana's move myopic.

On Twitter, Asiana's decision to sue KTVU is indicative of deranged management. And funny how Asiana thinks it's this news report that is making them look bad and not the crashed plane -- Kyung Lah, CNN, Los Angeles.

(END VIDEOTAPE)

QUEST: Interesting.

Now after the break, the NFL's European expansion, the fans are (inaudible) some of the players not much so. And I'll work out what to do with this.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: I promise you, I could do some serious damage with this. And it wouldn't be pretty for anyone involved.

The NFL's Jacksonville Jaguars got their first look at London's Wembley Stadium this afternoon. They'll be playing there once a year for the next four seasons. And if NFL executives have their way, they'll get at least one team playing in London every week.

Not all players are sold on the idea, as Jim Boulden discovered.

(BEGIN VIDEOTAPE)

JIM BOULDEN, CNN CORRESPONDENT (voice-over): In a city already full of this kind of football, from the likes of Chelsea and Arsenal and Fulham, could this form of football become a common sight in London? The NFL is a massively profitable league in the United States. It has played on regular season game at London's Wembley Stadium since 2007.

This autumn, there will be two regular games here with the Steelers, Vikings, 49ers and Jaguars on the fight card. A few players from each of the four teams got a tour of Wembley. Would they like to play here full- time?

BOULDEN: Can there be an NFL franchise in London?

JARED ALLEN, MINNESOTA VIKINGS: No.

BOULDEN: It didn't take long for that answer.

ALLEN: I think it would personally be great. I love to travel and I think, you know, being abroad would be awesome. But the logistics of getting back across the pond for eight games a season, you know, you're going to be away from your family.

BOULDEN (voice-over): Not all the players are that negative.

DONTE WHITNER, SAN FRANCISCO 49ERS: I think that a football team here would be pretty cool. I would think that during the week, or in travel somewhere, probably we'd probably have to leave and go there early in the week and stay. So it would be more so like baseball and going on a three- game, four-game road trip.

BOULDEN (voice-over): There is a new wrinkle in this prospect. The owner of the Jacksonville Jaguar franchise, Shahid Khan, has just sealed the deal to buy Fulham Football Club, one of London's smaller soccer sides. He already agreed to let the Jaguars play one game each of the next four years at Wembley, to the delight of one of his players.

UCHE NWANERI, JACKSONVILLE JAGUARS: Mr. Khan buying Fulham is big for us, you know, in Jacksonville, you know. That will -- that's literally giving a connection for us in Jacksonville over here to London. And you know, it's something that I think will benefit both sides.

BOULDEN (voice-over): Taking into account the NFL has no immediate plans to expand, there is talk a franchise like the Jaguars could relocate to another city and London would be high on that list. But one big drawback beyond the travel is obvious: London-based games draw fans from around Europe and there are jerseys backing every American team in the league.

Would those fans be so quick to drop their loyalties? And back a weak relocated team for an expansion team with few stars at the start? The answer to those questions may well determine the future of any NFL expansion across the pond -- Jim Boulden, CNN, London.

(END VIDEOTAPE)

QUEST: Earlier in the program, we told you about Coca-Cola blaming cold weather for weak second quarter numbers. Tom Sater's at the World Weather Center, been looking into this research.

I mean, is it justified, looking at the meteorological aspects, never mind the financial ones?

TOM SATER, AMS METEOROLOGIST: Richard, as soon as you mentioned, the CFO was blaming the weather, the meteorologists back in the CNN World Weather Center started poring through the data. Now if you look at the entire quarter, even though this is just a satellite, bear with me here.

April was colder than average. But only for Beijing northward. And that was 1.5 degrees. That was it. The rest of China was average or above. May was actually warmer for Beijing, 1.5 degrees. So it cancels it out, the rest of China average or above. And June, average or above.

So again, it looks like most of China was not colder than average, unless Coca-Cola just sells all of their product in Beijing for the month of April. Just another way, another example, Richard, how everyone wants to blame the weather.

We are looking at a few heavy downpours, so could be a few isolated showers from Hong Kong, north of Shanghai the heavier rainfall will be in areas of the northeast, south of Beijing across the Korean Peninsula, that's been hit very hard lately.

The only travel delays I can find for the business travelers or anyone else would be Seoul, would be Mumbai, maybe isolated thunderstorms in Calcutta and Hong Kong as mentioned.

Temperatures are going to be warm, though; Beijing 32 on Wednesday, Shanghai 35, Hong Kong 32. In Europe, I cannot find any possible air delays, unless it's going to be volume or a baggage problem. We do have just a few high, thin clouds trying to drift across the area south of England. We're not getting any rain from this, with the exception of a sprinkle.

Here we did it again, 31 degrees. It was 31 in London on Saturday. Sunday it was 30, Monday, Tuesday both 31, well above average. The streak will continue. We're looking at more heat to move in. In fact, 31 is expected as you say on Wednesday as well. Vienna 29, Rome 29 as well, the heat continues in areas of Portugal and Spain.

But the next three days it looks like we're finally going to catch a break from maybe the extreme heat or higher than average but the sunshine will continue for maybe the next 10 days and unfortunately with that comes the lack of rainfall. They're getting a good deal of rain in the Southern Plains, but the heat is on in the Northeast.

The highest temperature so far this season for Washington, D.C., 36; Philadelphia, New York, extreme heat advisories in this area. And of course warnings for the Philadelphia area as they hit 35.

The forecast will continue to be quite warm if you have plans to travel toward the northeast in the U.S., be prepared, unseasonably not just hot, but humid as well; it'll feel even a few degrees warmer than that when you factor in both of them.

So at least some needed rainfall in the South. And there you have your temperatures for Wednesday.

Richard, quite interesting, though, when it came to Coca-Cola.

QUEST: I need to just come in on this hot weather business.

Firstly, Tom, I mean, all right. It's unseasonably hot. But it is summer. So frankly, if it's -- you know, one would hope that it is going to be nice weather or sunny, (inaudible). But here's the question: why is there -- is there any understanding as to why it is unseasonably hot? You know, this is, as my mother would say, it's all that global warming.

SATER: Let's say for the U.K.'s purposes, you've got high pressure right over you. Now that's not a bad thing because it does compress the air and it warms things up. Unfortunately, it's going to be dry for the next 10 days, but you're going to have sunshine at least, partly cloudy conditions for 10 days. But high pressure's good for you, Richard. It pumps your blood. They say you sleep better --

(CROSSTALK)

QUEST: Yes, but why -- but I -- but no, Tom, Tom, you're -- why are we getting this unseasonably -- I mean, is it -- is it just one of those things, one of those weather facts? Or can we say that this is part of climate change?

SATER: It's way too early for that, Richard. I mean, if this continues for like a month, then we'll talk.

But this -- right now, your jet stream's north of you. Still unsettled in Scotland in -- up there. But for the most part, we'll talk if it continues.

QUEST: We'll talk, St. Swithin's Day, should continue.

Tom Sater, good to see you as always.

A quick look at how the markets are trading in New York at the moment. The Dow Jones industrials are down 27. If they can't unwind that in the next hour or two, the next hour, then there won't be a record. Remember, on the 26th or 27th, record for the Dow and the S&P, and that's the way it's trading. @RichardQuest is the Twitter address.

Lily has tweeted, "I wonder if Boeing's Dreamliner will recover from these incidents. My bet is it will."

And Lily Mayer (ph) also says, "What went wrong in my upbringing? I was brought up to be an honest person, although it won't be for my benefit."

When we come back in a moment, there's a "Profitable Moment."

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: "Profitable Moment": we chose to lead on the unemployment story from the OECD because it is by far and away the single biggest scar across our society at the moment. And it's deepest where it is fresh. Young people come off badly in this crisis and they are continuing to do so.

In Greece and Spain, around six in every 10 -- six in every 10 under 25 are jobless. If you've got a job, you're in the minority. It's astonishing and dangerous. Our global economy's undergoing painful transition.

Whole industries are being remade, reformed like shifting tectonic plates, and restructuring of course is necessary. There needs to be a sense of crisis, too. We've had enough of seeing money on the table that doesn't get spent except on air tickets for summits by governments which appear to be out of touch.

It's no good, politicians mouthing about doing something. There's a lost generation; it's real and it's happening. And if the best that Europe can say in 2013 is that youth unemployment will remain high, go hang your heads in shame.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.

(MUSIC PLAYING)

(BEGIN VIDEO CLIP)

QUEST (voice-over): It is the top of the hour and these are the headlines:

Egypt is moving forward with its political transition. The country's interim president swore in dozens of cabinet members on Tuesday. Nevertheless, many Egyptians believe Mohammed Morsy is still the rightful president.

His supporters protested overnight; seven people were killed in clashes. The state-run TV reports 400 people were arrested.

The fugitive U.S. intelligence leaker Edward Snowden has applied for temporary asylum in Russia. If granted, Snowden will be able to stay for up to a year. The former security contractor's been hiding at Moscow airport for three weeks.

The leader of one of Mexico's most powerful and feared drug cartels is in police custody and facing a very long list of charges. Miguel Angel Trevino Morales (ph) was captured early on Monday near the U.S. border. He is the leader of the Zetas cartel, known for its ruthless violent tactics.

Authorities in Panama have seized a North Korean ship traveling from Cuba through the Panama Canal. They were tipped off the ship had drugs on board; instead, they found military equipment. The president of Panama says the seizure contains parts of a missile hidden in the cargo of brown sugar.

(END VIDEO CLIP)

QUEST: You're up to date with the news headlines. Now "AMANPOUR" is live in London.

END