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QUEST MEANS BUSINESS
BP Leaking Money; Toyota Turns Corner
Aired August 4, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: BP puts an end to the oil spill. Now it is leaking money left, right, and center.
There is change in the air, Cathay Pacific's chief exec tells CNN the slump is over
And Toyota turns a corner. It is making lots of money, the question is one of trust.
I'm Richard Quest. It's midweek and I mean business.
Tonight we may have reached the beginning of the end of the worst oil spill in history in the United States. In the last hour, President Barack Obama welcomed news that the Macondo Well, in the Gulf, has reached a so- called static condition. The president was speaking on his 49th birthday and said the battle may be nearing an end, but reminded everyone the work continues.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The long battle to stop the leak and contain the oil is finally close to coming to an end.
And we are very pleased with that.
Our recovery efforts, though, will continue. We have to reverse the damage that has been done. We will continue to work to hold polluters accountable for the destruction they've caused. We have to make sure that folks who were harmed are reimbursed. And we are going to stand by the people of the region.
(END VIDEO CLIP)
QUEST: President Obama. Well, now the broken well has been plugged with thousands of gallons of heavy drilling mud. The well pressure is under control and BP is watching to make sure it stays that way. These are live pictures as you would expect. The company says reaching static state is a significant milestone in the bid to permanently seal the leak. It is 107 days since spill.
The waters are clearing in the Gulf. This is interesting. The U.S. government says almost three-quarters of the oil, 75 percent, that spilled has been cleaned up or broken down by natural forces. The White House energy advisor, Carol Browner, says that in itself is an important fact.
(BEGIN VIDEO CLIP)
CAROL BROWNER, WHITE HOUSE ENERGY ADVISER: We definitely are making progress. Oil hasn't been leaking for some time, the static kill going well, but ultimately it is the relief wells that we ordered drilled that will be the final kill, kill. Probably in the next 10 to 14 days that will be done. But an important step last night and as you also noted, our scientists and external scientists believe that the vast majority of the oil has now been contained. It has been skimmed, Mother Nature has done its part, it has evaporated. And so, I think, we are turning a corner here.
(END VIDEO CLIP)
QUEST: That is Carol Browner from the White House. David Mattingly has been doing sterling duty in New Orleans. And David is still with us there.
Lot's to get through, so we'll rattle through this. Last night we spoke, static kill was about to begin. So have they pushed all the oil down into the reservoir?
DAVID MATTINGLY, CNN INT'L. CORRESPONDENT: That is exactly what they have done. It took BP only about eight hours of pumping that drilling mud into this well to achieve that system that they call static. So they effectively, for all practical purposes, killed this well. This well is dead because it no longer has the pressure to push up against that mud. It has been pushed back down into its reservoir, back down into the hole that it crawled out of, and created this disaster when it exploded back in April.
So that threat has completely been removed. We hear about turning a corner. The big corner that was turned here was when they put the cap on. That was when it stopped the flow of oil, but now they have got it completely under control and effectively killed this well.
QUEST: David, you and I could sit and argue and discuss why they couldn't get that cap-or invent that cap, or build that cap, whatever you want-until the cows come home. That would be moot to some extent. More interestingly just at the moment, though, is this report that 74 percent of the oil has either been dispersed, evaporated, burned. That is extraordinary.
MATTINGLY: That is extraordinary when you look at that figure on the face of it. But when you look at the numbers a little more closely we see that only 50 percent of the oil that came out, and we're talking about a lot of oil, when we look at 4.9 million barrels of oil that was spilled. Half of that oil has been collected or evaporated, or biodegraded to the point where it is no longer in the environment, the other half of the oil was still in the environment. It is under varying stages of breaking down, in the environment.
We are looking at oil that has been dispersed, either chemically, or just by spewing out of the well the way it did. They are looking at what is called a cloud of oil on the microscopic level. These are particles of oil that are smaller in diameter than a human hair, that are forming a cloud, deep down below thousands of feet below in the water, that is moving along with the currents. That is slowly breaking down, but that is still there.
There is also oil on the surface. It is considered negligible. But there is still a sheen. There is still tar balls, there are still things like that. All of that is still in the environment that is still going to be breaking down.
I mean, we are easily looking at, if you just look at the government figures, over 1 million barrels of oil that could still be in the environment and still be breaking down. So, this disaster is still living on every single day. And they really don't know what effects, long-term effects, short-term effects, it is going to have on these delicate ecosystems. Those are the big questions that they are still trying to answer, Richard.
QUEST: And David Mattingly is answered them, or at least (UNINTELLIGIBLE) this evening. Many thanks, David, down in New Orleans. Hopefully we haven't got too many more days where we will be able to get to grips with this.
BP bosses, well, you just heard two sides of that from David, but the BP bosses will well be breathing a small sigh of relief. Because if you look at the checks that the oil giant is having to sign so far. Let's begin. From the clean up costs, it is $2.9 billion, for BP. Now the company, that is just the clean up on the beaches and round there. BP has also shelled out $256 million as part of a $20 billion fund. Now those claims, of course, will still be coming in, in the weeks and in the months ahead.
Also, the giant has set aside $100 million as for unemployed rig workers, as a result of the leak. It is all starting to add up. Particularly when you think of the escrow account that BP has agree with the White House they will put together. So, factor in the granddaddy of them all, the potential lower-level fine of $17.6 billion, if negligence is resolved, and you start to see how this is actually going to play out. Serious sums of money.
One of those people who was hoping to get some of that money, representing more than 500 commercial fisherman, is Robert Gordon. He represents fishermen's lawsuits against BP. Mr. Gordon joins me now on the line.
Good news, the well is capped, but obviously you are now still proceeding at a pace for compensation.
ROBERT GORDON, WEITZ & LUXENBERG: It is certainly good news that the well is capped. However, if you can imagine your house burning down, and imagine your business burning to the ground, and someone tells you 107 days later, that we finally put out the fire. It wouldn't be much consolation to you and that is what we are facing.
QUEST: Right. But-but-
GORDON: We have clients who are out of work, have no hope of going back to the jobs they once had. And this is, although, obviously everyone understands it is great for the environment that it stops and doesn't make it worse, these people are still bereft and going to be filing for bankruptcy and going to be unfortunately having to move out of the area in large quantities.
QUEST: Now, BP has throughout said that legitimate claims will be paid. The escrow account has been set up, it has independent verification, and monitoring. So what is your fear now as the compensation process moves on?
GORDON: Well, first of all, it is very unclear and we are working with Ken Feinberg, the special master who has been assigned that fund, to figure out what the criteria is to get these people paid. This fund will probably be able to pay for many of the shrimpers and the oystermen and the pilots who fish in the Gulf, short-term. It is going to be very difficult to understand how to compensate them for the long-term because we don't know for how many generations these waters will be able to be fished, how long it will take for oysters or shrimp to come back. We just don't know that.
And when it comes back, the question is, has the oil or these clouds, these microscopic clouds of oil, as well as the dispersant, Corexit, that was used in massive quantities, never before used, whether or not that may have an impact on the fish itself, or on the acceptance of the fish by the eating community. So, it is going to be hard to figure out what is going to be the right number for those people. But this is just-the first claim is the shrimpers and the-that's the easy claim.
QUEST: Mr. Gordon, let's just delve into that, though. I mean, in the sense that you are at the forefront of these claims, do you fear that BP or the escrow fund are going to take a particularly harsh line on who is entitled and who is not entitled?
GORDON: There is concerns that many of the fishermen worked for day wages, not all of them have the necessary documentation to prove what their losses were, and I believe that Ken Feinberg will try to do a good job to make this go away. But it is still going to be a situation where people, who are about to loose their house, and who have to take money now and give up their right for whatever future damages they have, just to get by for now. And in five years, they may regret that terribly. We don't know.
GORDON: It is going to be hard to say. I'm sure Mr. Feinberg will try to use the money wisely.
QUEST: Mr. Gordon?
GORDON: Obviously, this $20 billion is not a cap, it is simply and amount to make sure that there is $5 billion put in a year, for the next four years, to make sure that there is cash flow available to pay these claims.
QUEST: And we need to leave it there, Mr. Gordon. I appreciate your time. Many thanks, Robert Gordon, joining me on the line there from New York.
A rough ride today for Standard Chartered stock, despite some robust results the man who manages the money tell us why he thinks China holds the key for the second half of the year.
QUEST: The booming banking results is not coming to an end. No sign of abating this evening. We need to put some perspective. Come and join me over in the library, as we look at Societe Generale's receipts, where Q2 certainly more than tripled to $1.4 billion. The French-based, Paris-based banks, the shares finished up more than half a percent. A bit of a miserable performance on the market, which when you think that this is France's second largest bank, was helped by these higher earnings, and its French retail division. The chief exec is counting on growth, interestingly, in Russia.
Now, Societe Generale is a backbone in the French-this is a fascinating story. The Lloyds Banking Group now, of course, largely owned by the U.K. government. The bank made a profit for the first time since it bought Halifax Bank of Scotland, HBOS. The deal, of course, which sent Lloyds into the toilet just a couple of years ago. But the fact that the bad loan charges are starting to fall, helped to send the shares up more than 3.5 percent. And the chief exec of Lloyds says the bank is moving in the right way. The U.K. government is committed to returning Lloyds back to the market.
But this is the one we really do need to talk about. Because although the consumer unit missed its numbers. Standard Chartered actually had a much higher standard, which it was expected to hit, because so much of the company is based in Asia. Showing that, if you like, double standard between Lloyds and say, Standard Chartered, Standard's shares fell 5.2 percent. The U.K. bank sees three quarters of the earnings from Asia and it was that Asia performance that performed rather brilliantly. Now, CNN's Jim Boulden caught up with Standard Chartered's chief Richard Meddings and wanted to know the outlook, particularly, when you bear in mind how much of the business is in Asia.
RICHARD MEDDINGS, GROUP FINANCE DIRECTOR, STANDARD CHARTERED: We've been very consistent with our strategy. We are focused on Asia, Africa and the Middle East. And we have continued to build customer relationships. So we stay very consistent to service strategic foundations. And when you look at our two banks, the wholesale bank, and the consumer bank, you see very good underlying momentum in both. So, consumer bank income is up 8 percent and the wholesale bank client income was up 18 percent. And the balance sheet in both of those businesses grew strongly. So we had very good increases in loans to customers and also in deposits from customers.
JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: Standard Chartered, like other banks based here in the U.K. have also been reporting better than expected decrease in their loan impairments. Things seem to have gotten better more quickly than the analysts had expected. What happened? What happened the first six months that allows the banks to say that, hey, maybe the bad loans aren't as bad as we thought?
MEDDINGS: Well, in our case it is very important to reflect on a balance sheet that is conservative and robust and well diversified. So, if you think about the consumer banking business we have only 15 percent, one, five, percent of our assets are unsecured. Therefore, 85 percent of balance sheet in the consumer bank is secured, or partially secured. So, a lower risk profile.
In the wholesale bank, again, much of our business attaches to trade and cash management, syndications type businesses. And so we don't carry exposures to the more difficult asset classes that cause such mayhem to the Western banks over the past few years. In this first half you see excellent loan (UNINTELLIGIBLE) performance. We were down 60, six, zero, percent on the first half of last year.
BOULDEN: Of course, the vast majority of your business is in Asia. But here in the U.K. there are new regulations coming in. There is a lot of talk about the tax on the banks. Just like we're having everywhere in the world. Are you concerned that maybe the banks in London may be more heavily regulated as it were, than maybe banks elsewhere?
MEDDINGS: Well, the first thing to say is that we are highly supportive of the directions of the regulatory changes. Particularly as they are attached to capital and liquidity. And in the chairman's statement, in our results today, he makes the point about U.K. banks might be disadvantaged, essentially U.K. regulations get ahead of other jurisdictions. I think the big challenge here is to make sure that, across the world, the regulators introduce equivalent regulation on a parallel basis.
BOULDEN: A lot of talk about China, of course, and the vast majority of your business is in Asia. How do you see China right now? Some people see it as slowing down. Some people see it as a worry. Other says, of course, we're talking about coming off a very high growth rate. How does your business see China, and how key is that for what is going to happen in the next second half of this year?
MEDDINGS: It's a very important business to us. We were founded in China, over 150 years ago. We were founded in India and China in the same year. So it is a very important business. We had very good growth in this first half, consumer banking income in China grew 27 percent, and the wholesale bank client income grew at 40 percent. We've had therefore, very good growth. Balance sheet was up 20 percent.
You also saw that we invested in agricultural banks. So we invested $500 million in the Agricultural Bank of China. That is a very good opportunity for us to look to cooperate with them across a whole range of products where we can each provide support to each other's customer bases.
BOULDEN: So no worry about a slowdown in China, at least for Standard Chartered?
MEDDINGS: That's right.
QUEST: Now the slowdown may not be happening but there was that slide in SC shares. In it all added to a choppy trading session across the Continent. So look at the numbers and you'll see after a largely feeble session the region's main indices did eke out, well, I was going to say they did eke out much gains, but just off a tad. A little bit in Frankfurt. And overall, a better than expected snapshot of the private sector employment, in the U.S., helped relieve some investor anxiety over consumer led-I can honestly say that if you take those numbers in the middle of August, with the level of trading, that we're seeing at this time of the year, we got a way lucky.
To the U.S. markets now, and it is a similar story. We've got to be so careful about making any prognostications, when you have these sorts of levels. Up just 33 points. The nerves there are on the economic outlook. There was a better-than-expected report on the private sector employment. But overall, we are in the middle of August.
When we come back in a moment, surprised by the bounce back, Cathay Pacific's chief executives tells this program, behind the carrier's rebound, so now it is time to do a deal with Airbus.
QUEST: Hong Kong's largest air carrier says the future is looking up. Cathay Pacific is predicting profits will improve in the second half of this year. It is an out book, it is an out-it's an upbeat outlook. Not easy to say. After the airline posted its best ever six-month profit for the first half. Cathay's numbers showed a net income of $881 million and was boosted by a rebound in passenger-and also crucially important, cargo traffic. Shares of Cathay were up almost 4 percent in Hong Kong.
Shortly after unveiling its record results Cathay announced it had done a bit of shopping. The airline is buying 30 Airbus A350 XWBs, along with Boeing aircraft. So that is a sizable order for Cathay and is part of its re-fleet financing. The multi-billion dollar order has been closely watched which plane Cathay would pick for it new generation of travel. The rivals, of course, was the 350WB, which they bought, or the Dreamliner 787 from Boeing. Now the Boeing aircraft has the distinction of being the fastest selling jetliner in history. More than 900 have been sold.
So Andrew Stevens, in Hong Kong, asked Chief Exec Tony Tyler, why did they go 350, not 787?
TONY TYLER, CHIEF EXECUTIVE, CATHAY PACIFIC: Look, they are both very good airplanes. So we had a really good look at both of them; the 787-9, the A350-900, both very, very good airplanes. But after a lot of analysis and, of course, some hard commercial talk, with both manufacturers and the engine suppliers, we concluded that in our network the A350-900 just (UNINTELLIGIBLE) and so we are very happy to have made our decision.
ANDREW STEVENS, CNN INT'L. CORRESPONDENT: It sounds like you got quite a good deal?
TYLER: I think we did get a good deal. I tell you all manufacturers worked hard, Boeing and GE put in a good effort, as well, getting our business. But in the end it went to Airbus and Rolls.
STEVENS: Cathay, unlike its rivals, and specifically in this region, Singapore Airlines and Qantas, has stayed away from buying the A380, the superjumbo. Why is that?
TYLER: I can't speak for these other airlines, of course, but whenever we modeled that aircraft operating on the Cathay Pacific network, and compared it with other options, the Boeing 777 300ER, and now of course, the Airbus A350 itself. We have just found that these other options are more profitable.
STEVENS: OK, let's go back to the numbers. We spoke six months ago and you were very cautious, very hesitant about the outlook, but your interim numbers look pretty strong. Are you surprised by the strength of your rebound?
TYLER: We have rebounded very strongly. And certainly, you know, I think we have been around- the management of Cathay Pacific has been around long enough to see good times and bad times follow each other in quick succession. So we are always a bit nervous about the outlook. But we have been surprised by how well things advanced. Two things in particular, obviously cargo has really come back strongly. And also the premium traffic has come back, driven very much by Hong Kong. Financial services businesses here in Hong Kong is something we are very exposed to and they have been going very well over the last six months.
STEVENS: And are you back at the pre-crisis levels?
TYLER: We're almost there at our pre-crisis levels. I mean, in terms of cargo, we are probably there already. On the passenger side, some weeks we are back to where we were. Some weeks are just a bit short of it. But on the whole, you know, we do seem to have now got back to pretty much where we were.
STEVENS: So looking ahead, there is still weakness in the European and the U.S. economies. How cautious do you remain?
TYLER: We are in a cyclical business. Now, let's remember that. What we are seeing here is not, well, we were down, now we're back on up and it is going to carry on going up in a kind of a-in a way that is driven by a trend. We are now I think in the up cycle. And until you the up cycle--
STEVENS: And how long is it going to be an up cycle?
TYLER: -this is going to be another-well, I don't know, but if you look at recent history, the cycles have been shortening, getting shorter and shorter. So, I don't know. I mean, certainly for the next two months, our forward loads, the messages we are getting from the cargo community, are that things are looking pretty good for the next two months. Beyond that, the crystal ball gets cloudy.
STEVENS: And fuel at $80 a barrel, north of $80 a barrel, is that going to keep prices for tickets relatively high?
TYLER: Well, at those sort of levels, the fuel surcharges, of course, do have an impact and yes, they do tend to keep ticket prices pretty firm. We have to pay for our fuel. All the airlines have to pay for the fuel. And, you know, 18 years ago it was $25 a barrel. Now, it is $80 a barrel, as you say, plus. And it has to be paid for. So people say fares are high. We have to pay for this stuff I'm afraid.
QUEST: The chief executive of Cathay Pacific, that's Tony Tyler talking to Andrew Stevens.
The smart viewer amongst you will have noticed perhaps that words and pictures did not mix. The European numbers that I showed you on the charts weren't correct. Now, I'm going to show you the right numbers. There you see it. Of all the major markets, the FTSE was down, largely on the back of the Standard Chartered 5 percent loss. The Xetra DAX and the CAC currant both eked out small gains. But I caution you, even though you are now looking at the correct numbers, in the middle of August, choppy markets, from low volumes.
We're out to New York coming up next. The Dow Jones industrials, we will find out what is moving the New York market. QUEST MEANS BUSINESS will be back.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, on this network, the news always comes first.
Iranian officials are denying reports of a possible assassination attempt against President Mahmoud Ahmadinejad. They say a blast in his motorcade in Western Iran was caused by a firecracker tossed in celebration by a spectator. Earlier reports have said it was a handmade grenade.
Official results from an historic referendum in Kenya are expected on Friday. Voters went to the polls on Wednesday to decide on a new constitution. At stake, a fundamental reform of the country's government. There were no reports of trouble today, but more than 1,000 people died in violence after the country's last election three years ago.
One of the worst oil spills ever may be about to come to an end. BP says its "static kill" operation to permanently seal the leaking well is a success for now. And the U.S. official in charge of the operation now says there's a high confidence no more oil will leak. The crisis is not over yet and BP is still working on an emergency relief well, which will plug the damaged well for good.
To Wall Street now. We could get excited about some very small moves on the Dow. But as I've been telling you all morning, all afternoon, the markets' thin volumes, middle of summer.
Felicia Taylor is in New York.
And yet, the fascinating part is whenever we get these minor pieces of economic news, the market does react.
FELICIA TAYLOR, CNN CORRESPONDENT: It does a little bit, I mean but the markets are kind of stuck in a holding pattern today. This week, as we've been talking about, is all about the jobs report that we're going to get on Friday. We did get a preliminary look from ADP. That's a payroll processing firm. They basically only look, though, at the private sector, so that's a segment of the jogs -- jobs market. It grew for the sixth straight month in July, adding 42,000 jobs. Of course, that's good, but the U.S. labor market overall remains weak. But at least it's not getting any worse. That's -- that's the good news on that.
The biggest concern, obviously, though, is when we have a job -- a weak job market is that consumers will curtail their spending habits. Don't forget that unemployment is a lagging indicator.
TAYLOR: So that's one of those things that we have to think, you know, to sort of temper. Any buying today, though, it is pretty much being met with some selling pressure on the marketplace. As you said, it's only up a third of 1 percent right now.
QUEST: All right, take your career in your hands. It is time for us -- I always enjoy this bit, when we -- we actually have to talk about our own parent company, Time Warner, owner of CNN. Hey, listen -- listen, I'm not groveling to my upper management, but the way I looked at these -- you know, well, fair dues. The way I looked at these numbers, jolly good show.
TAYLOR: A jolly good show is absolutely right. I've got to tell you something. The parent company of this network, now that it's got AOL in its past -- keep in mind, this is the third time that it has reported since AOL was spun off. The dollars are coming back in terms of advertisements. Time Warner is really showing strength here. Quarterly earnings rose 7 percent. Revenues reached the highest level in two years.
TAYLOR: One analyst says that the management team here is phenomenal...
TAYLOR: Listen to this: "They're disciplined, they've bought back a lot of...
TAYLOR: -- stock, they beat expectations." He says this is a $40 stock. Frankly, he's a little surprised that it's not being reflected today. Time Warner, right now, is up just a quarter, a quarter of 1 percent, at $32.44.
TAYLOR: What do you -- what do you mean (INAUDIBLE)...
QUEST: Stop groveling to management, Felicia. There must be something...
TAYLOR: I like it here.
QUEST: -- you can (INAUDIBLE).
TAYLOR: Not. Not really. I mean the truth is, the cable networks are doing well, like CNN, even though we've got our critics here at the -- at CNN. It's a premium brand. So when it comes to selling advertisements, people pay for that premium in those offices. The cable networks are getting ratings that are close to the broadcast networks. For instance, HBO now has 30 million subscribers. Time Warner produces plenty of original programming that it sells to other broadcast networks and makes money.
TAYLOR: PBS -- remember that?
They've got Conan coming in November. That's a premium name. Its film division did well, "Clash of the Titans," "Sex and the City." So all of its properties are actually hitting all cylinders right now.
QUEST: All right. Fine. You've got a...
TAYLOR: It's good news.
QUEST: Fine, you've got a job until Christmas. All right, you'll be working until the end of the year.
Felicia Taylor, who's in New York.
What more can I say?
When we come back in just a moment, after eight million recalls and no shortage of bad breaks, some good news for the world's biggest automaker. Toyota's latest numbers.
QUEST MEANS BUSINESS, in a moment.
QUEST: Months on from the major recall crisis that hit Toyota, the company is roaring back and it's most firmly in the black, partly because of aggressive cost cutting, but also surging sales, they've put Japan's number one automaker very firmly on the front foot.
Kyung Lah now reports from Tokyo the next six months, though, as it looks to solidify those gains, may not be quite as easy.
KYUNG LAH, CNN CORRESPONDENT (voice-over): The profits are back, reported Toyota management, saying for its first quarter, the automaker roared to a $2.2 billion profit, reversing steep losses from the same period a year ago. Sales in the first quarter were up around the globe, except for Europe, weighed down by the Greece debt crisis.
Even in the lucrative U.S. market, where millions of recalls tainted Toyota's reputation for safety, sales jumped thanks to showroom incentives.
Toyota also bumped up its forecast for vehicle sales and profits for the year. The first quarter suggests the world's largest automaker appears to be on the earnings recovery track.
Does that mean consumers have forgiven Toyota for the recalls?
From a financial perspective, it's too early to tell, says Toyota management. "Trying to figure out how it will affect our profit is complicated by a number of factors," says Toyota's senior managing director. "For us, the most important thing is to earn back consumer trust as quickly as possible.
KOJI ENDO, ADVANCED RESEARCH, JAPAN: Mr. Toyota has a number of very serious, big issues to tackle.
LAH: Among them, millions in potential losses, as Japan's surging yen erodes the value of overseas earnings. Ahead for Toyota, lawsuits from the recall could total into the billions. And a sputtering recovery in the U.S. may spell slowdown.
ENDO: 2010 was supposed to be the first year to start seeing some sort of improvement -- big, drastic improvement (INAUDIBLE).
LAH (on camera): And are we going to see that big, drastic improvement?
ENDO: I believe so far, so far means, again, the first quarter, but now maybe the second quarter.
LAH: But for the second half of the year, analysts like Endo fear what should be a profitable year could reverse course and, say, in six months, the earnings picture for Toyota could be a very different story.
Kyung Lah, CNN, Tokyo.
(END VIDEO TAPE)
QUEST: We already know about the unremitting heat if you're traveling to Moscow and points into that -- into the eastern side of Europe. But if you're going west, to the United States, it's the southern states you need to be concerned about.
Guillermo Arduino is at the CNN World Weather Center.
More hot terrible.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes. And that they are concerned, especially in the southern states, you know. It can get really, really hot. Remember that we have here, in the Gulf section, people working to clean up those beaches. And all that with so much sunshine and a prolonged heat wave, we are in trouble.
Look at the temps. Even Kansas in here, 42.7 was the record yesterday; 41.6 in Little Rock, Arkansas. So today is Thursday. Many Europeans and people from other countries are coming to the United States. I want you to bear that in mind, to come with that idea, because the contrast is going to be very significant from where you're coming to, except for Russia and Poland, because these states, even parts of the Midwest, as well, heat index over 40 degrees, to dangerous levels.
Look, heat index in the vicinity of New Orleans, 41. So it's going to continue.
Right now, we have 33 in Atlanta, 36 in Dallas, 31 in New York. It is 2:41 p.m. right now, 31 in Washington, DC. All over here and into parts of the Northeast, as well. Toronto, 31 degrees. That's the temperature as we speak.
But in the Southern Hemisphere, if you want to go skiing, go to Argentina and Chile. It's wonderful there, with all these high pressure centers that we have had, it's the opposite that we see in the Northern Hemisphere -- prolonged cold snaps. And we get a lot of mountain snow, anywhere from Mendoza into Portico in Chile and south into other parts, like Baria Locha (ph). The cold air will prevail with the jet stream keeping that cold air over there. So it is going to be another polar air event.
La Nina can be blamed for it, too. We have very cold conditions coming from the Pacific Ocean.
Ten degrees in Santiago now. B.A. at nine.
Moscow, as you mentioned, Richard, we see temperatures getting worse on Friday, close to 40 degrees again. It is unrelenting. So the impacts are clear. We've been talking about money. We've been talking about the agricultural problems and price is going up in many commodities.
So you see the high prevails in here, even though I must say that I see more clouds that are coming into Russia right now.
Watch out, Poland, because apart from those storms,. You're going to see some hot weather there prevailing; parts of Germany, as well -- Richard, you'll have rain, but thanks is going to be a nice day.
QUEST: I'll take your word for it and I want my money back if you are wrong.
Guillermo at the Weather Center.
Finally, tonight's Profitable -- very Profitable Moment.
Forty of America's billionaires pledged to give at least half of their fortune to charity. It's part of a campaign organized by Bill Gates and Warren Buffett. It's called The Giving Pledge and these are a few of those who pledged money. You have Ted Turner, of course, the founder of CNN; the Hollywood director well known for giving us Star Wars, George Lucas, is there, as well; Oracle co-founder Larry Ellison; and, of course, Michael Bloomberg, the mayor of New York. All pledged to give away their fortune.
And that is QUEST MEANS BUSINESS for tonight.
I'm Richard Quest.
I thank you for your time and attention.
Whatever you're up to in the hours ahead, I hope it's profitable.
"MARKETPLACE AFRICA" is next.