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QUEST MEANS BUSINESS
U.S. Jobs Report Better Than Expected; Middle Class Focus; Manufacturing Renaissance; U.S. Stocks Up; European Markets Rally; Analysis of U.S. Jobs Report; Spain Considers Help; Medal Economics; Greek Marathon Effort; Dollar Falls; IAG Spanish Strife; RBS Libor Investigation; Toyota Bounces Back; Technical Glitches Cause Catastrophe for Knight Capital; Facebook Shares Gaining
Aired August 3, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Call it a job lot. U.S. hiring increases, but it's not enough to bring down unemployment. Tonight, we speak to the U.S. Labor Secretary, Hilda Solis.
(BEGIN VIDEO CLIP)
HILDA SOLIS, U.S. LABOR SECRETARY: I don't think it's a jobless recovery. I think there are jobs being added.
(END VIDEO CLIP)
QUEST: The markets clearly agree. They are soaring, a gain of nearly 2 percent. From New York to Milan, markets are up.
And also tonight, the marathon runner who wants to prove her country can run more than a deficit.
I'm Richard Quest. It may be Friday, and I still mean business.
Good evening. The U.S. is continuing to power up from the depths of recession. Job figures for July were better than expected, and tonight we get into the details. If you join me over at the CNN super screen, you'll see exactly what happened.
This is the trend so far, but in July, 163,000 new jobs were added, and it increased that gaining three months, May, June, July. Having seen a very straight trend going down, now the trend is back up again. Three straight months of gains, although they have been below 80,000 -- 10,000 so far.
Now, the jobless rate increased to 8.3 percent from 8.2 percent. More people resume the search for work. But overall, the jobless rate has been over 8 percent. It's the trend that you need to look for in this. So, we had this trend, and now that is the trend, heading back up again.
If that trend continues, then it will be encouraging for Barack Obama, because the president only has three more jobs reports to get the numbers well and truly up in terms of jobs created, and the unemployment rate down.
It's been more than 70 years since a president won with an unemployment rate above 7 -- above 7.4 percent. And the unemployment rate, as I remind you, is 8.3 percent. So, today, President Obama focused on easing the tax burden on those that do have jobs.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Here's the thing. We are not going to get there. We're not going to get where we need to be if we go back to the policies that helped to create this mess in the first place.
And the last thing that we should be doing is asking middle class families who are still struggling to recover from this recession to pay more in taxes. Rebuilding a strong economy begins with rebuilding our middle class.
(END VIDEO CLIP)
QUEST: Now, the president's likely opponent in the November election, Mitt Romney, says today's job report, 163,000, 8.3 percent, is proof the president's polices aren't working. The candidate says he's the only one who will help the middle class get back on track.
(BEGIN VIDEO CLIP)
MITT ROMNEY (R), U.S. PRESIDENTIAL CANDIDATE: Today, we just got a new number from the unemployment report, and it's another hammer blow to the struggling middle class families of America, because the president has not had policies that put American families back to work. I do, I'll put them in place and get America working again.
(END VIDEO CLIP)
QUEST: Let's get into the detail of all of this. The U.S. Labor Secretary, Hilda Solis, says helping the middle class is a priority for the Obama administration.
SOLIS: I am pleased, though, with this job report, and I know that we have a long way to go. It remains at 8.3, it kicked up a bit because more people are looking for employment, and that's -- that's somewhat healthy, because we see that the job growth in this report is across the board: manufacturing, business and professions, leisure and hospitality, and health care.
Those are -- it's almost across the board, with the exception of local government, where we did continue to see a slight loss there.
QUEST: It is still -- and I'm very aware that talking to you, 8 percent, 8.3 percent is a lot better than the European Union's -- or eurozone's 11 percent. How worried are you that what's happening on my side of the Atlantic could eventually have a really bad effect on your side?
SOLIS: Well, we are -- we do take note of what's happening there. But I have a lot of confidence. I know that the leaders, there, have been working with our -- with our leadership, with Timothy Geithner, our treasurer, and also our president.
And I'm hopeful that the leadership in the EU will come together and realize that it's important to create stability because everybody will be impacted. So, definitely we keep our eye on the ball and want to see continued discussions, and hopefully some resolution.
QUEST: And in the United States, as the president faces reelection in just a few months, do you believe meaningful jobless -- job creation can now take place in the next three to four months that will bring the unemployment rate down. The Fed certainly says this week that it doesn't necessarily see it.
SOLIS: Well, I have to provide my input on information that is given to me with respect to past job reports. So, I'm not in a position to project what will happen in the next two or three months, but I will tell you that in the last 29 months, we've seen job creation, 4.5 million private sector jobs.
And in manufacturing, we've see the greatest growth n the -- since 1989, of clearly 500,000 jobs created in manufacturing and especially in the automobile industry, where the president took very decisive action to make investments there and create solid manufacturing jobs.
Our impetus right now is focusing on recreating ourselves in manufacturing, and we're seeing a renaissance, and I do see that in this report, and we hope to continue to see that.
QUEST: That's something that a recent edition of "The Economist" pointed out, didn't it? That manufacturing is the sleeping giant, if you like, that seems to be awakening in the U.S. economy. And yet, the rest of the world might often think that America doesn't make anything.
SOLIS: Well, I think that that attitude is changing, and in part because of the leadership that this president has provided. We know that we have to become more independent in areas like renewable energy.
So, he's made major investments there, and we're going to, I think, continue to reap those benefits as our economy repairs itself. We've done a lot in terms of training people up in new areas in manufacturing, so I think there is a renaissance that is going on, that's taking place.
QUEST: Finally, Madame Secretary, when we came out of the Great Recession, we talked about the jobless recovery. It was the hallmark of the last two years, if you like. That jobless recovery isn't over yet, albeit it's getting better. Is that a fair characteristic?
SOLIS: Well, I -- I don't think it's a jobless recovery. I think there are jobs being added, and I think that there's also the expectation that we are going to come back, and that's what our -- our resolution is here, and I think the American public is very resilient.
There are a lot of people that obviously want to find employment. We want to help them do that, and the president and I and other members of the cabinet are going to do everything we can to help them find those jobs, and that's why we're making major investments.
But we also need the cooperation of the Congress. There's bills right now sitting before the Congress that have been there for ten months that could create a million jobs in construction and infrastructure, repairing our bridges, our sewage systems, and also putting teachers and firefighters back to work. Those are really important areas, because those are middle class jobs.
QUEST: Middle class jobs and the U.S. Labor Secretary. U.S. stock were much higher on the positive numbers. The Dow Jones Industrial's up, now, 234 points, well over 13,000 again, and nearly over 1.75 percent.
And that bon ami and good cheer -- look at the Europe markets and how they reacted to what they saw happening. London up, Frankfurt up, the MIB up 6 percent in Italy, and Paris up as well. So, we've had this week of extraordinary volatility as they've reversed yesterday's losses and the losses and the gains earlier in the week, 6 percent higher.
And European banks finished the week well. In Paris, it was Societe Generale, 10 percent up. Paribas, 8.5 day of results. Deutsche Bank was also up nearly 9 percent in Frankfurt.
Anthony Chan is the U.S. chief economist at JPMorgan. He joins me now, live from New York. You know, Anthony, I listened to the president, I listened to Romney, I listened to the secretary, and I'm still not sure whether the numbers we saw were good, bad, or somewhere in between.
ANTHONY CHAN, U.S. CHIEF ECONOMIST, JPMORGAN: Well, I'll tell you, I think the numbers were encouraging. I think that the truth is always somewhere in the middle between what both presidential hopefuls are telling us.
The truth of the matter is, we are creating jobs. However, with an unemployment rate of 8.3 percent, we need to be creating even more jobs in order to make a dent. But make no mistake about this, this employment report relative to expectations was, in fact, encouraging, despite the fact that there were some aspects of the report that certainly were not as bright.
QUEST: And if we look at that, we often see the contradiction. How can more jobs be being created, but the unemployment rate still goes up? Is that because more people are looking for work when previously we've been told it's because people drop out of the work load?
CHAN: Well, the truth of the matter is that when you look at the labor force, we did get a big decline in the labor force of about 150,000 people. If those people would have stayed in the labor force, obviously that doesn't help the unemployment rate.
In this case, it wouldn't have really moved the needle much, but certainly that was a catch-up over the last two months, the prior two months, where the labor force was increasing.
But to answer your question and cut to the chase, the reason why we're seeing the unemployment rate picking up while we're seeing job creation is simply because the unemployment rate is computed from the household survey, which is a survey of people that are asked whether they're employed or not employed.
And that number was weaker, as opposed to the number that everyone's talking about today, and that's non-foreign payrolls. And that number was stronger, and that comes out of a different survey.
So, you really had a tale of two cities. You had the household survey a little bit weaker, and then you had the establishment survey a little bit fast or a little stronger. But at the end of the day, when you look at both of those reports, over time, the impact gravitate towards each other, and that's what was happening today.
QUEST: Stay exactly where you are in New York. Tale of two cities, tale of two economies. In a major change of stance, Spain's prime minister suggested he'll consider getting help from Europe's bailout fund.
Rajoy now seems more open to the idea of tapping the EFSF. He told reporters he would make a decision one way or another depending on the terms he's offered. It's up to the government, he said, to get Spain on track.
(BEGIN VIDEO CLIP)
MARIANO RAJOY, PRIME MINISTER OF SPAIN (through translator): I would like to say that the government is charged with a clear mandate, a mandate to fix the problems of our country. We won't promise miracles, because we know those can't happen.
But when you get down to it, when you know the problems, when you act with serenity and with perseverance, which is what the government will do, the result will come.
(END VIDEO CLIP)
QUEST: Anthony Chan in New York. All right. It's all been about Spain, it's all been about, to some extent, the central banks talking and failing to deliver. As we come to the end of the week, pull the strands together for me of where we stand, do you believe.
CHAN: Well, I think it's encouraging. I think Draghi certainly set the pole, and certainly he set the stage for saying that the central bank would put, in fact, its weight behind these countries, whether it be Italy or Spain, if they go ahead and try to request assistance from the EFSF.
Of course, for quite some time, Spain has sort of backtracked and basically not moved in that direction. But I think that now that we know the rules of the road, they're moving in that direction, and we should commence paying for making those positive steps. It's a tough political step for them to make, but it's a necessary step.
QUEST: We'll talk more about that, you and I, in the future. Good to see you. Have a good weekend in New York. Anthony Chan from JPMorgan joining me live tonight from New York.
The track and field events have begun in London, and for one Greek athlete, defying the deficit may have been the biggest hurdle of all. We'll hear from her, next. QUEST MEANS BUSINESS, live from London. Good evening.
QUEST: Now, join me over the stadium. China has won two more gold medals on the day seven of the Olympics, and if sport is supposed to be a great leveler, it doesn't look that way on the leaderboard as you can see.
Time for some medal economics, medalenomics. The top two economies are the top two on the medal board, as you can see, China and the United States. The third biggest economy has a joint third-most medals, and that's Japan. So, to some extent, the Olympic medals does seem to follow the way global or GDP, nominal GDP, works overall.
But the bailout countries are far behind. If you look at how many the bailouts have got -- Spain, Greece, Portugal, and Ireland. Now, I'm not sure what we can extrapolate when you look at the large economies and the bailouts. But it's worth noticing and noting anyway.
Sunday's marathon will probably not bring these countries many more medals, but one Greek runner knows she can still bring back the pride. Jim Boulden met the athlete whose journey to London was, without doubt, economically more difficult than most.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Tina Kefalas missed the Opening Ceremony, choosing to keep training at high altitude in Greece. Now, she is finally in London, getting used to the weather ahead of Sunday's marathon. Her goal, a personal best time, under 2 hours and 40 minutes.
TINA KEFALAS, GREEK MARATHON RUNNER: Just being able to be here after the roller coaster ride for so many years is definitely just a blessing for me.
BOULDEN: Kefalas got a sneak preview of the route on Thursday, and filmed part of it on her iPhone. But she wasn't sure she'd be here, even when she qualified in April as Greece's sole female participant in the marathon, given the harsh economic climate back in Greece.
KEFALAS: Given the crisis and the crunch, they've been forced to cut back on how often they give their stipends or if they give it at all. So, that then puts the crunch on us.
BOULDEN: Greek Americans heard about her story and decided to sponsor her, right down to buying her training shoes, and that led to sponsorship at home.
KEFALAS: I've been fortunate enough to have a sponsor, Echo, it's a member of the Greek petroleum group and a major player in the industry, so they've been supporting me, fortunately.
BOULDEN: Kefalas hopes other members of the diaspora will emulate her willingness to tough it out in Greece.
KEFALAS: Greeks are very successful abroad, and so I think that now we have to try and make the country a way so that we can be successful in Greece, as well.
BOULDEN: And what better way to show Greek spirit than participate in the one Olympic event named for a Greek city.
KEFALAS: Even though people know I'm not going for medal, I think that they're very proud of having a Greek representative in the marathon. And I think that's important for Greece to have that representation wherever -- whatever place we end up getting, just to show that we're still here and we're still fighters and we're still running strong.
BOULDEN: She'll be running strong on Sunday in Greek colors.
Jim Boulden, CNN, London.
QUEST: Now, the track and field events are underway as you are aware, so it's fitting that our Currency Conundrum has an athletic theme. Which country nearly decided on its women's 100 meter representative with a toss of currency -- the coin? Was it A, the United States, B, South Africa, C, Romania? The answer later in the program.
The dollar and the yen tumble as those better-than-expected hiring numbers damper demand for safe havens and questions on interest rates. The euro is on the up. It's the one-day best rise in a -- in a month. Those are the rates --
QUEST: -- this is the break.
QUEST: IAG, International Airlines Group, is the parent company of British Airways and Iberia, announced and said it was making contingency plans for a Spanish exit from the euro. Look at the numbers on how IAG performed.
It had a first half-year loss of $312 million, and most of that -- well, all of it -- was from the Iberia side of the company, a significant loss. Now, IAG says it's holding fortnightly meetings, management crisis meetings, on the euro crisis.
Shuffle the deck. Royal Bank of Scotland, a pre-tax loss of $2.3 billion. The story with RBS is really the previsions being made, whether it's PPI insurance, hedge funds insurance, whether it's -- they now say, of course, that they've sacked people over libor scandal, and the bank has admitted that it's probably going to have to take some punishment, too.
Shuffle the deck. Toyota Q1 profit nearly $4 billion, recovery from disasters of 2011, and it says it expects to sell more cars than previously thought.
Whatever results these have had, and whatever your company has had this week, it's probably nothing short of Knight Capital's. The chart just says it all. Just let's look at this chart and just -- now, there's not many companies that will have seen that sort of performance during the course of the week.
Knight Capital is a market maker -- basically, the buyers and sellers of stocks, and it sells and it makes markets in various shares. On Wednesday, it had a critical problem with its software. It caused millions of erroneous trades, many of which the New York Stock Exchange had to reverse, and it's cost the company itself $440 million in just less than an hour.
By and large, the company's now saying it's looking for capital and it says two days on, many people still haven't returned to the company. By Thursday's end, Knight shares were down some 75 percent.
Let's talk about what's happening and how this all fits in. Felicia Taylor is in New York, and joins me now. Felicia, the one thing we see with these crises, flash crash, whatever one it is, now Knight Capital, that there's a view, isn't there, that we really are just waiting for one of these things to take us over the cliff?
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: Yes, absolutely. It's -- and as you mentioned, there's precedents for this. This isn't the first time that we've seen this. But this is really eroding investors' confidence.
And the truth is, the technology has been out there for a while, but not so long that we haven't had these problems happen a number of times. You mentioned one of them. We've had the flash crash, we've had BATS. The Facebook IPO. That was just a couple of months ago, and now we've got Knight's literally nightmare.
So, the problem is is that technology is great. It's wonderful when it comes to speed. But when there's a glitch, that glitch can be compounded in seconds and minutes, and they don't necessarily have the testing absolutely right yet, and that was the problem for Knight.
And the CEO has come out and done everything he can, but they got a lot of credit to stay open, basically just through the end of this week. The question is, are they going to be able to get those investors to come back to them, as you mentioned --
QUEST: All right --
TAYLOR: People like Vanguard Fidelity, Citibank. They're not going back to them yet.
QUEST: OK. Forget Knight Capital for a minute. It's a relatively small beer in the great scheme of things. The core question is whether the financial system is A, too clever for its own good, and B, an accident waiting to happen? That's what our viewer wants to know tonight.
TAYLOR: Listen, there have been people out there, namely a man named Larry Tabb, whose got a company with his own name, saying the ghost in the machine have gotten out of control. Even Duncan Niederauer, the head of the New York Stock Exchange, he says nobody rational would look at this and say it isn't broken.
So, when you have people like that out there that are acknowledging the fact that there is possibly an accident out there that could happen, that has investors very, very concerned.
There's not 100 percent in this. When you allegedly test the system and glitches still happen like the magnitude of Knight Capital, that's not small. $440 million in a matter of minutes -- it was 45 minutes -- is enough to bring a company down.
It may not bring down something like a Vanguard or a Fidelity, but it's enough to make investors wonder, wait a minute, why am I getting into the market when something like this can take away all the profits that they've seen?
So, there is definitely the sense by investors that an accident could happen at any point in time. Why are they supposed to trust these people?
QUEST: Felicia Taylor, calm down. We'll have -- we'll speak to you next week.
QUEST: It's too much for a Friday. A Friday during the Olympics. Now, let me update you on the tech-heavy NASDAQ. This time yesterday we were describing how Facebook had dipped below $20 a share for the first time. Well, it managed to close just above that --
QUEST: This is the number. Right now, it's gaining back everything it lost and more. Facebook is currently up more than 9 percent, around $22. That's still 43 percent from its debut in May.
After the break, unemployment during President Obama's first term. We visit with one person who's pretty much been unemployed for the whole of the Obama presidency.
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and here, on this network, the news will always come first.
A British court has sentenced both parents of a murdered teenager to at least 25 years in prison. Prosecutors said Iftikhar and Farzana Ahmed murdered their daughter, Shafilea, because of her Western ways. Shafilea had also refused to accept an arranged marriage in Pakistan.
There are reports of fierce fighting in several parts of the Syrian capital, Damascus. This video shows rebel fighters sweeping a suburb devastated by heavy shelling. A major battle is also looming in the key northern city of Aleppo, according to a top U.N. official.
And the U.N. general assembly has approved a resolution condemning the violence in Syria. The assembly overwhelmingly voted for the Saudi Arabia- sponsored resolution 133-12. There were 31 abstentions. The resolution expresses deep concern at the lack of progress towards implementation of a peace plan.
The track and field events have begun on day 7 of the London Olympics. The host nation has a shot at the medals board. Great Britain has won three more gold medals with the men's cycling team setting a world record in the track team pursuit final.
QUEST: Three years after the recession officially ended, nearly 30 million Americans remain unemployed. Of those, more than 40 percent have been without work for six months or more. Some lost their jobs during the financial crisis and haven't worked since.
Kyung Lah's in Los Angeles for us. Good evening.
KYUNG LAH, CNN CORRESPONDENT: Well, Richard, this is the long-term unemployed, as you point out. We wanted to focus in on their thoughts, the political implications of this group as well as the economic and the personal one.
(BEGIN VIDEO CLIP)
LAH (voice-over): The start of the day, and a new full-time job for Ernie Casillas. These first steps on the Los Angeles airport tarmac have been nearly four years in the making.
LAH: How long were you unemployed?
ERNIE CASILLAS, FORMERLY UNEMPLOYED: I'm going on four years November 6th.
LAH: Four years?
LAH (voice-over): Barack Obama started his new job as president a short time after Casillas lost his job making big bucks as a mortgage broker. CNN met him as the subprime mortgage crisis wreaked havoc on the economy and his own career.
CASILLAS: Driving expensive car, the cars, having an expensive suit. I'm in this just like everybody else (inaudible) work. It humbles you.
LAH (voice-over): He not only lost his job, but his home and his marriage. He moved in with his mother. Casillas went to job fairs and networks, sending out hundreds of resumes. He started his own computer consulting company, but it never took off. Increasingly desperate, he put this ad on Craigslist, stating bluntly, "I need a job."
Last year, still unemployed, he hit downtown Los Angeles carrying a sign.
CASILLAS: But I am so tired of collecting unemployment.
UNIDENTIFIED MALE: I think that there's a lot of us who are walking here who know we're not that far away.
UNIDENTIFIED MALE: (Inaudible).
LAH (voice-over): Last week, he was at rock bottom.
CASILLAS: I had something to eat. Didn't have much but that. I look under my car seat and I had $1.65 cents.
LAH (voice-over): That paid for the gas that took him to meet Anna Rosales, and she gave him a job as a supervisor for her cleaning company newly contracted at LAX.
ANNA ROSALES, CEO, AVOR INC.: He deserves it. Everyone deserves to work. Have you ever been unemployed? Ever not be able to pay a bill? There's a whole lot of earnings out there.
LAH (voice-over): As the next presidential election looms with the economy as a defining issue, Casillas' political intentions may surprise you.
LAH: Who are you going to vote for?
LAH: Why not vote for Mitt Romney?
CASILLAS: He -- I don't think that he's with the people. He's a person that we can for (ph).
LAH (voice-over): Casillas says Obama, less distasteful than Romney, deserves more time. He says his long jobless ordeal showed him there's no easy path out of unemployment and no quick fix for this country's sluggish economy.
(END VIDEO CLIP)
LAH: So I asked Casillas, "Did you learn anything while you were unemployed?"
He said he learned three main lessons: one, he's a supervisor at a green cleaning company. He was a mortgage broker. And incidentally, he's making more money as a supervisor at this cleaning company. So one, don't get boxed into thoughts of what you should be doing. You might be pleasantly surprised.
Two, network, network, network. That's how he got his job.
And, three, save your money, because he was spending, Richard, 110 percent before, putting everything on credit cards. Now he's planning on saving at least half of that first paycheck he gets, Richard.
QUEST: Kyung Lah, excellent reporting from Los Angeles, bringing to us the real meaning of the unemployment numbers that we are reporting tonight. Kyung Lah in L.A. We'll be back in a moment.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The "Conundrum" answer, which country almost decided on its women's 100-meter representatives with a toss of a coin? The United States, A. Alison Felix (ph) and Jennifer Tama (ph) tied for third in the face for Olympic selection. A coin toss was initially suggested. A runoff was eventually decided, but Tama withdrew and Felix took the spot on the team.
(END VIDEO CLIP)
QUEST: Two of Japan's biggest electronics companies are sinking deeper into the red. Firstly, Sony says its first quarter loss ballooned by 70 percent at $314 million. And Sharp's quarterly net loss nearly tripled to $1.7 billion. Just look at those numbers, frightening.
The company planned to cut 5,000 jobs. What's interesting is that both companies said sales of their televisions are plunging. In Sony's case, off 35 percent. Sharp even more, 50 percent. Jim Boulden is in the living room, Jim?
JIM BOULDEN, CNN CORRESPONDENT: Well, Richard, let's ask this question: does trouble for one of the one-time kings of TV manufacturing spell trouble for the entire industry? Well, let's go back to 1948, end of the London Olympics.
The first Games that people could watch on their television sets in their homes, though of course few did. But it was a breakthrough for television technology in the U.K. And within a few years, people in Britain and the United States were buying black-and-white televisions in droves.
Then of course came the color upgrade in the 1960s and '70s, and TV set sales took off again, leading to this past decade of the revolution of flat screen TVs, where of course Sony and Sharp made their mark. But they went for volume sales, pushing prices to razor-thin profits. After that, an extremely strong yen making their TVs much more expensive than the ones coming from China and South Korea.
Now of course, in Western markets, those of us who want a flat screen TV have one, while in emerging markets are proving harder to crack than manufacturers had predicted. Blame that on worries about buying big-ticket items when Western economies are sluggish.
So what could help sales? Well, a report by Display Search says 3D TV shipments are up 74 percent this year. What are we going to buy them? Maybe having some of the London 2012 Games in 3D will help to spark sales. Or should we hark back to the good old days of black-and-white tellys in wooden boxes, sitting comfortably in our living rooms? I'll leave you with that one, Richard.
QUEST: And Jim, and in those days, that sort of thing, it was a piece of furniture, the television, the good old-fashioned piece of furniture.
A quick question to you, Jim, have you -- the question is not where we've been, though, isn't it? It's where we're going. Where will I be watching you in the future?
BOULDEN: If you think about what my children do, they don't watch TV on their TVs. I think that's the bottom line. They are watching on other screens. And while they're watching on other screens, they're doing other things as well.
I think the classic TV is going to go away.
QUEST: A bit like you. Jim Boulden, thank you very much indeed.
I've always wanted to do that.
Now the weather forecast, let's switch on Jill Brown at the CNN World Weather Center, where we are very keen to know that track and field forecast for the weekend.
JILL BROWN, AMS METEOROLOGIST: That's right, looks like we might have a little bit of rain for that. We're going to get to the Olympics in a moment. We're going to start you off, however, with a look at what's going on here. In Asia, where we had two tropical system make landfall within 24 hours, which is very unusual, the last time that happened was in 2006.
So this is remnants of Damrey to the north and now remnants of Saola to the south. Now big rain producers, it doesn't look like we're going to see these tropical systems come back to life, once they make landfall they tend to diminish and what you do get is a big rainmaker.
So as you can see, anywhere where the blue is or purple, we could be looking at five to eight to even 15 centimeters of rain. So flooding, absolutely a possibility. Real problem to the north, because we have this stationary front here. All that tropical moisture coming into it and if it's not moving quickly, these amounts of up to 100 millimeters of rain could be added onto twofold for sure.
And there's no problem getting a lot more rain with this one. It's just a question of how long that will last. So looks like northern Korea will certainly see some of this heavy rain, Beijing sort of on the fringe. But this is one of the busiest locations -- the busiest location, really, on the globe for tropical systems. And there's not really a season. It can happen all year long. So no surprise.
We have another one beginning to develop at this point. It is Tropical Depression Haikui and it is forecast to slowly strengthen over the next 24 hours, heading towards Okinawa. After that, we may strengthen a little more quickly and the track is still in question at this point. You have to give it a little bit of time before we can know the exact track that it will likely take. But heading off to the west.
All right. Let's talk about the Olympics. Right now temperature is 19 in London, wind steady at 20 kph, so not real strong winds, but a bit breezy out there, visibility is good. Our forecast, the big question is are we going to get rain going into the weekend. Well, that seems like a real possibility here.
As you can see with the radar, we've had just a few passing showers, nothing really significant. But that cool, damp weather is likely to last going into the weekend. And then it should clear our next week. So, again, there's a close-up look at your radar, not much in the way of rain the last 12 hours.
So temperature wise, those are the current winds, these are your current winds, again a little bit of a breeze, nothing real strong. But that could affect some of the track and field events, as could the cloudy, damp weather.
So we're researching it to figure out will that seem like that would be good weather for running. But if it's a short sprint, cool weather, your muscles stay cold; they're not likely to have a lot of record-breakers. But the endurance events, the marathons, that cool weather could mean some better times. So cool weather we may have.
We may also have some showers. Taking a quick look at Saturday. You can see pretty good possibility of some rain showers, 60 percent, it looks like, going into Sunday, maybe a slightly better chance of rain and then once that area of low pressure moves out, looks like high pressure moves in and middle of next week, dry, sunny weather. So maybe it'll be a little bit warmer. Richard, back to you.
QUEST: Thank you very much. I shall be wary of that cold weather if I'm going for a run.
QUEST: On my sofa, watching the television. Many thanks indeed. Have a good weekend.
And that, as they say, is our report for this week, with a weekend of sport ahead of us. That's QUEST MEANS BUSINESS. I'm Richard Quest. Thank you for making time for us. And as always, whatever you're up to in the hours ahead, I do hope it's profitable. I'll see you next week.
ROBYN CURNOW, CNN HOST: A bicycle is a rare sight here on the busy streets of Johannesburg. But across Africa in rural communities, a bicycle is an essential part of everyday life.
Well, you're watching MARKETPLACE AFRICA. I'm Robyn Curnow. And we're going to take you this week to Mozambique, where one company is changing lives by introducing quality, handmade bicycles onto the market. And in a continent where many people can't even afford a car, a bike is the key to economic empowerment.
(BEGIN VIDEO CLIP)
LAUREN THOMAS, COFOUNDER, MOZAMBIKES: We thank you all for being here today. We're so excited to have you.
THOMAS: My name is Lauren Thomas. I'm the cofounder and managing director of Mozambikes Limitada. Our goal is to use bicycles to improve the lives of you, Mozambicans. It is impossible not to notice the long distances that people walk with extremely heavy loads balanced on their head under hot sun. And the easy question is why don't they ride more bicycles.
Very quickly, what we found is that there are some real impediments to building a proper bicycle industry in Mozambique. The main reason why it is difficult to get a good bicycle in Africa is because bicycle components are not produced in Africa. And so with transport costs, the actual gross cost of a bicycle is much more expensive than it would be in Europe or in Asia.
And we started to brainstorm how we could combat some of those obstacles, what we could instill into Mozambique to get more people on bicycles to facilitate their daily transit. And Mozambikes was born.
We are a social venture, meaning that we are for-profit business that is seeking profits for the purpose of scaling our social mission, which is to change Mozambicans' lives with affordable transportation.
The for-profit model is a business that brands the bicycles with colors and logos of local or international businesses. That fee that we would charge for branding the businesses essentially reduces the price that we could sell those bicycles to market. Fully branded bicycle is 3,500 meticais, which is a little bit above $130.
Now what we do is offer the branding and the bicycle separately. An advertiser could pay 2,500 meticais so that we can sell the bicycle for approximately $35 to market. Because the bicycles on the back end become so affordable, many clients simply want to buy the full bicycles.
DOMENICO BORRIELLO, MANAGING DIRECTOR, SAVERITE: What Mozambikes (inaudible) idea and which aligned with our favorite way of thinking, the bicycle in the store is going to be an item with a very marginal margin or no margin, just to promote that -- the concept that SaveRite believes in.
THOMAS: So thank you very much. Please always keep in touch with us and let us know how you are using these bicycles.
THOMAS: Push the pedal. Push.
We didn't feel comfortable taking donations or grants into the for-profit social venture. So it's really the reason why we developed Mozambikes Social Development, which is a non-profit affiliate out of the United States, where people can go online via our website, donate or purchase a bicycle, which we then give away to a Mozambican that we screen to be earning below the minimum wage, people who clearly relate to us how they will use the bicycles to change their lives and the community around them.
BERTA NHANTAVE, BICYCLE RECIPIENT (through translator): In all my life I've never ridden a bike before. I'm very proud of myself, and I'm going to keep practicing in my home, because I really want to know how to use it. I really want to thank this company, Mozambikes, to give me this opportunity to have my own bicycle. They made my dreams come true.
Thank you very much.
THOMAS: We bring in the majority of our components from China, and I always caveat that with saying that we spend over a year working with our preferred supplier to design the right bicycle, and they are assembled here from spoke and nut and bolt, these bicycles are put together from scratch by our amazing team.
Our bicycles are higher quality than the bicycles that you see on the road. They have a minimum of two times the life of these bicycles, and yet are priced only incrementally higher, even before the advertising subsidies. A bicycle really means a lot of things for lower income Mozambicans.
AMINA JOAO, BICYCLE RECIPIENT: I'm very happy to have this bicycle, because I can use when I want to go to school. I can help in the orphanage, help my friends. If my neighbor needs help, if somebody needs to go to hospital, I can help them.
THOMAS: Having a bicycle will definitely change someone's life. It increases their opportunities for economic improvement. They can reach different schools that might be too far to walk to. They can reach clinics that they would not be able to access by foot. Frankly, the bicycles saves their lives.
(END VIDEO CLIP)
CURNOW: So there is an economic case for having a reliable, well-made bicycle here in Africa. Well, after the break, we're going to introduce you to a man who's come up with a rather simple but ingenious use for the bicycle.
CURNOW: Africa's energy crisis is well documented. Tens of millions of people -- in fact, much of the continent lives off grid. Well, have you heard of cycling to generate electricity? Our guest on "Face Time" this week is Sameer Hajee. He's the CEO of Nuru Energy in Rwanda. He's created a variation of the bicycle. After some furious pedaling, it creates power.
(BEGIN VIDEO CLIP)
CURNOW: What is this company? What do you do and what is so revolutionary about it?
SAMEER HAJEE, NURU ENERGY GROUP: Yes. Well, we're trying to address the issue of energy poverty, the fact that 2 billion people in the world still, for one reason or another, do not have access to electricity, modern electricity. We're primarily focused on working in Africa, East Africa in particular, and India.
CURNOW: And so how do you address -- I mean, the word "energy poverty," means you're poor and you can't switch your light on.
HAJEE: Yes, well, in fact, you don't have lights to switch on. So it's a matter of not even having that basic grid access that we all enjoy in other parts of the world. So as part of our work initially in 2008, we spent over a month living in a village in Rwanda, trying to understand what it is specifically that -- what are the energy needs of this base (inaudible) population.
And you know what, it's amazing, it's actually quite basic. It's light, it's cooking, it's mobile phone recharging and radio. And that goes into some of the low power energy needs that Nuru Energy is addressing.
HAJEE: We developed our specific lighting product, which is a portable rechargeable LED tasklight that can be purchased for about $6 U.S. retail in Rwanda, but then can be connected to other lights to actually have more light, if that's what you want.
CURNOW: And controversial perhaps, and a simple thing, depending which way you look at it. How do you power that light?
HAJEE: Yes. We looked around and said, well, what is the one energy resource that's untapped in this environment? And human power really came to mind. And we thought, well, if we can harness human energy in a way that we can create economic opportunity and low power electricity, wouldn't that be a game changing solution?
CURNOW: So what did you do?
HAJEE: So we basically developed what we're claiming to be the world's first commercially available pedal generator, a device that can recharge five of our portable lights in 20 minutes. Each of the lights provides one week of light to a rural household. Then product development technology development is half of the equation.
When we talk about rural Africa, you also have to look at distribution. So we realized very soon that we had to innovate on the distribution front as well. So we couldn't just sell product. We had to actually get involved in the value chain downstream.
So what we decided to do was we thought, well, if the generator can recharge five lights so quickly, could this not be the basis of a recharging business for a local entrepreneur?
And so what we started to a number of years ago is set up rural entrepreneurs, village-level entrepreneurs, women and men, who are running recharging businesses, recharging lights and now mobile phones and eventually other devices that we introduce into the platform.
CURNOW: And it's revolutionized people's lives.
HAJEE: Absolutely. So if you look at this from the standpoint of the customer, of a light, you know, they would purchase the light for $6 U.S. and then they would pay about 20 U.S. cents per week for lighting. This is compared to about $2 a week that they would spend on kerosene before. So it's 10 times cheaper solution for them.
From the entrepreneur's perspective, in 20 minutes of pedaling, they're recharging five lights, earning about $1 U.S., which is, you know, any of us that work in Africa know that that's much more than people make in an entire day. So it's a huge value proposition for the customer and for the entrepreneur.
CURNOW: And how do you see yourself rolling out this in other places? Is this very specific to Rwanda?
HAJEE: Well, we're adopting a micro franchising approach. So the generator, the lights, the entrepreneur approach is very standardized and it can be essentially cookie-cuttered and applied in any context in rural Africa.
We're starting particularly in Rwanda and the rest of eastern Africa, Kenya, Uganda, Tanzania. But we have been approached by a lot of joint venture, potential joint venture partners to expand it to other parts of Africa.
CURNOW: How crucial is this, this kind of product development and this way of looking alternatively -- it's simple problems and simple solutions.
HAJEE: Well, I really hope that this is a stopgap. You know, I really hope that what we're providing here is a stopgap solution to the immediate energy needs of (inaudible) populations. What I would really hope is that, you know, there's certainly effort needed in providing grid quality electricity to these populations. It'll take some time.
CURNOW: Anything else you want to say, particularly about social entrepreneurs? You've won an award for it. It's a buzzword. What does it mean, and you know, what do you do, really?
HAJEE: Yes. It's -- yes, it's interesting, I mean, social entrepreneurship to us basically means that we're running a for-profit business but we have that kind of social motivation that's driving our bottom line.
(END VIDEO CLIP)
CURNOW: That's it for this week's show. I'm Robyn Curnow here in Johannesburg. Remember you can always find us online at CNN.com/Marketplace Africa. See you again next week.