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QUEST MEANS BUSINESS
Fed Prepared to Take Action; Liverpool Football Club Transferred to New Owners; French Strikes Put Fuel Supplies at Risk
Aired October 15, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST, QUEST MEANS BUSINESS: Brace the printing presses. Ben Bernanke makes it clear he is willing to create more dollars.
After all sorts of kicking about, the entire Liverpool Football Club is being transferred to new owners.
And running dry, French strikes put fuel supplies at risk.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
The U.S. economy is bracing for another dose of freshly minted dollars designed to ramp up growth. Ben Bernanke the man in charge of the money looks poised to begin another round of so-called quantitative easing. That is printing cash, to you and me.
In a speech in Boston, Bernanke gave his clearest hint so far that the economy is about to get a fresh monetary boost.
(BEGIN VIDEO CLIP)
BEN BERNANKE, CHAIRMAN, U.S. FEDERAL RESERVE BANK: Given the committee's objectives, there would appear, all else being equal, to be a case for further action. One disadvantage of asset purchases relative to conventional monetary policy, is that we have much less experience in judging the economic effects of this policy instrument, which makes it challenging to determine the appropriate quantity and pace of purchases and to communicate the policy response to the public.
FOSTER: Well, you heard Ben Bernanke warn there that more QE will take the Fed further into risky uncharted territory. So, this is why we think he's doing it. Ben Bernanke says the stubbornly high rates of unemployment is simply too great a threat to the economy. He's also worried about the threat of deflation. That is falling prices.
The Fed chief doesn't see any risk of that yet. But he says the trend has been towards a slow down in inflation. Interest rates have now been close to zero for the nearly two years now. And it leaves the Fed no wiggle room at all without turning to those unconventional policies as he calls them.
And that is what it is likely to do at the next policy meeting, which includes-which concludes on the third of the November.
Now, Bernanke's remarks are still hitting the U.S. dollar several hours after he made them. Right now the dollar is flat against the yen. Hovering close to the 15-year low, it touched yesterday. The dollar is making a bit of a comeback against the euro now, though, bouncing off an eight-month low. It is also flat against the pound, the British pound.
Now, Bob Parker is a senior advisor at Credit Suisse Asset Management and he told me we're seeing the surest sign yet that the Fed is about to make a move.
BOB PARKER, SR. ADVISOR, CREDIT SUISSE ASSET MANAGEMENT: I think we've got a very clear message that the Federal Reserve is concerned about the low level of inflation and core inflation in America is now less than 1 percent. They are also very concerned about the high level of unemployment and the inability of the labor markets to create jobs. And it looks as though, regrettably, U.S. unemployment will probably stay well above 9.5 percent for the foreseeable future.
And they are also concerned, and this is where quantitative easing I think comes in as an insurance policy. What happens to the American economy if the Bush tax cuts, which expire at the end of this year, are not extended. And if they are not extended, they impact would actually probably be a negative 1.5 to 2 percent on the economy next year. So, the QE is needed, if you like, as an insurance policy, to underwrite at least positive albeit mediocre growth.
FOSTER: One of the fears he's expressing is inflation, of course, he's worried that if people don't expect higher inflation, they are going to put off their purchases.
FOSTER: Just explain why people need to feel, in his eyes, that there is inflation coming.
PARKER: Well, ideally, what central banks want is low, but positive inflation, and look at the problem in Japan. Year in, year out, we have deflation. If you expect prices to be lower next month, in six months' time.
FOSTER: You're not going to buy now.
PARKER: You delay all your spending.
PARKER: And that is exactly the problem in Japan. Because consumption remains weak, and if you look at the Japanese economy which is probably gone back into recession one of the reasons for that, and it is a real economic problem, is actually this persistence of deflation.
FOSTER: Let's talk about the deficit, because that is, as you suggested, becoming an increasingly political argument. It is, you know, the government can't be seen to be throwing money recklessly at the economy. These deficit figures are shocking and you can see why opposition politicians are playing into them. But more QE means a bigger deficit, doesn't it?
PARKER: Not necessarily. Because I think you have got to look at the difference between monetary policy and fiscal policy. More QE basically means the Federal Reserve increases its balance sheet, it is printing money, it is injecting liquidity into the financial markets. And obviously that could have a negative effect, a further negative effect, on the value of the U.S. dollar on the foreign exchange markets.
In terms of fiscal policy the real risk is that we have a political gridlock following the midterm elections and therefore there is no agreement between the Democrats and the Republicans about tax and public expenditure. And that is potentially a problem, because let's not forget, the American budget deficit is 10 percent of GDP. I think just in comparison, before the crisis, and before the IMF and the European Union went in, the Greek budget deficit was 13 percent of GDP, and it is now down to 7 percent of GDP. So it is an elevated, worrying number.
FOSTER: And what does all this mean for the world's reserve currency, the dollar?
PARKER: Well, I think inevitably, it means that the weakness that we've seen in the U.S. dollar, this year most notably against currencies like the yen and the Swiss franc, probably does continue after a period of some consolidation. But I think actually the weakness in the U.S. dollar will probably become very intense against the world's most undervalued currencies, which essentially are the Asian currencies. And although they say one thing in public, that they don't want, a stronger Chinese Renminbi. I think with higher commodity prices, therefore higher imported inflation into China, it is now actually increasingly becoming in the Chinese interest to allow a stronger currency.
FOSTER: Bob Parker speaking to me earlier.
Let's take a look at how the Dow is reacting to those Ben Bernanke comments, there. And at the moment it is currently down, 53 points. You can see, yeah. We'll bring you that graphic later on. You were seeing it a little bit earlier.
Investors obviously hanging on to every one of his words and the possibility of another round of monetary easing; investors also reacting to a flood of economic data, as well as earnings reports from General Electric and Google.
The Dow down 0.48 percent at the moment. Alison Kosik is on the floor of the New York Stock Exchange, joining me now.
I guess a negative response to Ben Bernanke because it wasn't firm news, Alison?
Hello, Alison. Can you hear us? We can see you? OK, we'll try to go back to Alison a little later on, there.
Next week, right here on QUEST MEANS BUSINESS we kick off our earnings season with the Q25. And this time we are getting even tougher. Find out what companies will make the cut.
Now Liverpool is in new hands, at last. John Henry's New England Sports Ventures has sealed the deal for one of England's most legendary football clubs. We'll look at the transatlantic takeover saga next.
FOSTER: Let's take two, to the New York Stock Exchange. Alison Kosik is there. We saw her earlier, now we can hear her.
ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Wonderful. Hi, Max. Sometimes it gets really loud here on the floor of the New York Stock Exchange.
You know, we watched stocks take a nice pop at the open, after Fed Chairman Ben Bernanke spoke this morning. But you know, things quickly went downhill, for a few reasons. First of all we got a weak consumer confidence report. General Electric's earnings definitely disappointed the Street. And there are also concerned about weakness in the banking sector. There is this slowdown in the foreclosure process, because of alleged faulty paperwork, and banks are under scrutiny now, there is uncertainty about how this whole foreclosure mess is going to affect the banks.
But let's go back to Bernanke, because the street did accept his comments as something that is favorable. He focused on two problems in the economy, high unemployment and low inflation. And he may have-gave his clearest sign yet that the Fed is ready to step in and jump start the economy. He didn't give any details as to how much he would put into this program to pump more money into the financial system, but he did indicate that the central bank could be ready to make purchases of Treasury bonds, Max.
FOSTER: OK, Alison. And lots of different pieces of data coming through. You talked about the corporate news also about the Ben Bernanke comments as well. Is this in the hard economic data that you have been looking at today as well?
KOSIK: The economic data, but also earnings. Wall Street today definitely focused on earnings. As I said, General Electric, a big disappointment for the street. The headline, they say, investors certainly looking past the headline on General Electric, finding that GE's earnings and revenue fell sharply. Revenue fell more than 5 percent with most of GE's divisions contributing to the declines. GE shares right now are getting hammered down more than 5 percent.
Mattel shares, a similar story here. Similar trend for the toymaker, it beat estimates, but missed revenue. Google, though, is bucking the trend. We are watching strong third quarter earnings for Google, net income surging 32 percent. On stronger ad fees, from advertisers, non-core businesses, like YouTube and Mobile Areas, definitely giving Google this boost.
Google, interestingly enough, is cashing in on the 2 billion YouTube videos that are being posted on the site, per week. That is 2 billion videos a week. That is a huge amount and that Google is cashing in on. Google, of course, is helping to carry the Nasdaq right now. It is up 22 points. The Dow Jones industrial average down 52, though, Max.
FOSTER: Alison, just one last word, on that Ben Bernanke. Everyone was expecting, it seems, some sort of monetary easing at some point. Does that mean it is already factored into the market and it is a case of if it doesn't happen, the market will fall, but if it does happened nothing is really going to change on the market?
KOSIK: Well, you know how the rumor goes. Wall Street often on the rumor and sells on the news, so that could clearly happen. The Fed is going to be meeting on November 2nd and 3rd, with possibly a decision about quantitative easing on the 3rd. And sure, I mean, a lot of it could be baked into the market already. You know they are really not sure until the day it happens, but there is the expectations that the Fed will go ahead and take action, Max.
FOSTER: OK, Alison Kosik, at the New York Stock Exchange. Thank you very much, indeed for joining us.
FOSTER: Now, the deal is done, the Liverpool Football Club is under new ownership after weeks of twists and turns. The $480 million purchase is finally being completed. Liverpool's new owner is New England Sports Ventures, parent of the Boston Red Sox. Now the sale means the club's main creditor, RBS, will be repaid in full, wiping out the club's acquisition debt of $377 million. The deadline for that repayment was today. The club's previous co-owners, initially tried to block the deal, saying it dramatically undervalued the team and pushed it into what they call an illegal sale. They say they'll now seek $1.6 billion in damages.
Now, CNN's World Sports-CNN's World Sports Alex Thomas, that's a tongue twister, joins us now.
You've been on it all day talking about this. Just explain why they want compensation for this?
ALEX THOMAS, CNN WORLD SPORTS CORRESPONDENT: Yes, they are looking for $1.6 billion in compensation. I'm not quite sure how they arrived at that figure. The essentially, though, they are very unhappy about the price the club has eventually been sold for. They do get that money, despite all the conflict they've had with the board. They are still the owners, they will still get the proceeds of the sale.
But instead of $480 million they considered Liverpool to be worth nearer $800 million. The conversation probably amounts to all the hassle, future earnings? I'm not a lawyer. Certainly it comes down to how much is Liverpool intrinsically worth, recently. Certainly under Hicks and Gillett, they won no major trophies, and while sport is big business, it all comes down to how their performances are on the sporting field and that then directly translates into money.
FOSTER: Exactly. So what are the arguments around any sort of value attached to a club, which isn't doing well, particularly, in competition and isn't making a huge amount of money.
THOMAS: Well, if you look at the new owners Liverpool Football Club, it is all happened today, amongst much high drama down at the legal offices of Liverpool Football Club's board. New England Sports Ventures are in the Major League Baseball team Boston Red Sox, since taking over from them, I think around 2002, 2003, they have won two World Series Championships. So certainly Boston Red Sox was a famous brand, especially in the States, but it hadn't won anything for decades, going back the early 20th century. So, Liverpool fans will be hoping they can do that to Liverpool, who in the `70s and `80s, were one of the biggest clubs in the world, certainly in Europe.
FOSTER: And I guess the fans are happy with this deal, broadly, because they were very much against these owners they had for all this time?
THOMAS: Yes, they are more happy, that Tom Hicks and George Gillett are going, rather than more American owners coming in. And that is why we are hearing John W. Henry, the owner of the Boston Red Sox, and NESV, we are going to do more listening than talking. And they understand the fans want a different type of ownership.
FOSTER: OK, Alex, we are just going to listen to this from the new owners, because you've been hearing from them today.
(BEGIN VIDEO CLIP)
JOHN W. HENRY, NEW OWNER, LIVERPOOL FOOTBALL CLUB: It is too early to say what we're going to do. But obviously we're here to win. We have a tradition of winning. We are the, what, the second highest spending club in Major League Baseball. And we are here to win. So we will do whatever is necessary.
(END VIDEO CLIP)
FOSTER: As you are saying, it is more about losing the old owners and getting new owners. But Man United obviously happy with their American owners, does that set a bad precedent, do you think, for the fans?
THOMAS: That's right. Because there is still a lot of debts around the Glasiers' (ph) ownership of the Manchester United, with NESV's takeover of purchase of Liverpool, they have removed hundreds of millions of dollars of debt, that has now been paid to the Royal Bank of Scotland. Just leaving a few million dollars of debt, and then making faith promises at the moment that there will be funds available to the Liverpool coach, Roy Holtsen (ph), to strengthen the team. And as I said before, if that improves performances on the pitch, that will lead to more finance and happier fans.
FOSTER: The fans will be happy.
Alex thank you very much, indeed, for that.
Now, the former owners, Hicks and Gillett, say the sale is an extraordinary swindle and the wrong thing for the club and the fans. New England Sports Ventures says it will return the club to its glory days. Antony Marcou is managing director of media agency Sports Revolution, and he joins me now.
Thank you very much indeed for joining us.
Talk there a bit about how you value a football club. Just explain how you would value a football club?
ANTONY MARCOU, MANAGING DIRECTOR, SPORTS REVOLUTION: It no different than any other media property. It is audience figures, and where those audience figures are derived from. And one of the biggest things that the EPL, as it is known, or the English Premier League is huge in Asia-Pacific. The growth of China makes that more and more appealing. And the Liverpool Football Club for all of its lack of performance on the pitch is still one of the strongest brands in the Premier League. And despite that investment perspective it is no man city (ph). You are not starting from a very low base. You are starting from a good bit of stock and equity, and it can build on it from there.
FOSTER: How many sports brands, football brands are there of that caliber?
MARCOU: New Yankees, Manchester United, it is clear they are the leading sport football brand, but getting more and more competition from that League in Spain. The work that Boss Lerner has been doing has been doing recently in wooing viewers and moving their kickoff time to 3 p.m., Central European Time, is for a piece of the Asia-Pacific pie. And you know, they are facing strong competition from them.
FOSTER: So when you are advising these Asian-Pacific fans, obviously, all of international business is interested in Asia-Pacific right now, because there is growth there.
FOSTER: How specifically are they getting money out of the Liverpool brand, or can they?
MARCOU: Well, the best example is their recent shirt deal. So, Standard Charted, a financial service institution from the region, has tapped into the complete latent love of the club in the region and is using that, using their crest, using the exposure they get on the pitch, and obviously the Premier exposure to take advantage of that. And that is hugely powerful. And I think from the fans perspective, if they can see more of that, because the first team improves, and the fans follow in bigger numbers, sponsors will flock to the club, which then is a virtuous circle, which then improves the first team. That is what has been missing under Hicks and Gillett.
FOSTER: From a commercial point of view what do you want to see the new owners doing? Do you want them investing in the team, so then the industry around that, can benefit?
MARCOU: Yes, I think it is no coincidence, that the most successful period of Manchester United commercially has been in parallel with their performance on the pitch. Sports is the entertainment business and people want to be entertained, and if they are in the bottom three like they are now, they are going to struggle to build sponsors from where they are. So the first team, investment in the first team is critical. The removal of debts has helped in that and then that brand will then follow success. And as I say, Liverpool have got a head start because they have a great heritage, right across the world.
FOSTER: And how much is it concerns you that some owners are unpopular, others are popular; how important is that in making money from the business?
MARCOU: Yes, I think it is important because clubs are brands and how their owners are it-it builds and affects their brand equity.
MARCOU: What I would say from the current owners, I think they have a great track record commercially, and on the field, with the Red Sox, and I think they can bring their expertise into this field. I think they have got the America's covered (ph) off, and I think with Liverpool's footprint in Asia-Pacific, I think they can be-it can be-
FOSTER: A global business out of it.
MARCOU: They have already got a good global business.
FOSTER: Antony, thank you very much, indeed.
Well, the French government insists that strikes won't affect fuel supplies, but most of the country's refineries are now out of action. So, is it just a matter of time before the nation runs out of gas? We're live in Paris after the break.
FOSTER: From Greece, to Portugal, and to France, European workers have taken to the streets this week, protesting against the latest austerity measures. France, today, saw its fourth day of nationwide action, in an escalating battle over pension reform. Unions there are planning another mass walkout tomorrow, and on Tuesday, the day before the bill is voted on by the senate. Elsewhere, strikes at 10 of the country's 12 oil refineries have cut fuel flowing to the main airports, the two main airports in Paris. And some gasoline stations have reported shortages due to panic buying already.
For the latest developments let's head over to Paris, and Senior International Correspondent Jim Bittermann.
Are people queuing up at stations yet, Jim?
JIM BITTERMANN, CNN SR. INT'L. CORRESPONDENT: They are indeed and we started to see some of that today. Particularly, in parts of the country that are close to refineries, in fact, their supplies were probably minimal because they always assume that they can always get fuel products, gasoline and diesel oil. And that is where the shortages seem to be the worst.
But we have seen some shortages right here in the Paris area. And the drivers are beginning to line up. The government wanted to avoid this panicking on the part of motorists. It doesn't look like that has happened, however. They released supplies yesterday. They released some reserves yesterday hoping that would build confidence levels on the street. But motorists have to have gasoline. A lot of people commute everyday. And when we talked to people today here is the kind of thing we heard.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE (through translator): For the refinery strikes and the general strikes are just-just unbelievable. That people go on striking (UNINTELLIGIBLE) for the smallest of reasons. When they know perfectly well that the pension reform is totally necessary.
UNIDENTIFIED MALE: I think we've seen this already happen in France and I think people are worried that at one point the lines are going to get worse and worse, and then at one point there will be no petrol.
(END VIDEO CLIP)
BITTERMANN: Another thing people worry about, especially the government, is the way that high school students have become involved in this movement. There are about 300 high schools that were blocked today. And that always is a bad sign in this country, because oftentimes when students get involved, things get more radical, Max.
FOSTER: So, I guess there are a few striking workers who are quite pleased at this news, which has put so much pressure on the government just ahead of that key vote.
BITTERMANN: Well, absolutely. I think that combination of factors both students and the refinery workers is something that the unions were kind of hoping for. They were hoping that this action would kind of jell the way it has been. We have seen this in the past, at various times along the line. And I think we're seeing it again. Now whether or not it will go on is another question.
One of the things I think the government has its fingers crossed about is that refinery workers, who are losing pay everyday that they are out on strike, over an issue that won't affect many of them, for many years, depending on when their retirement age is. That perhaps they'll be inclined to take the money now and worry about what happens later and later. And that will bring them back to work.
But at the moment, there are a lot of people on both sides who are very obstinate. Including the government, and no one is giving an inch. No one is making any concessions, for now, Max.
FOSTER: And it is a national right now, but if Charles De Gaulle gets affected, by a loss of fuel, then it becomes a Continental issue. How likely is that?
BITTERMANN: Well, the Charles De Gaulle authorities say that they have fuel on hand to last the weekend. That means that next week they are going to have to figure out some alternatives. Now there are alternatives. They can bring in fuel by trucks, but that is a pretty cumbersome and difficult process. Not the kind of thing they'd probably like to do if they really don't have to. So, they can probably get by. They can find other ways, other places, to fuel planes. Planes can fly in with fuel, extra fuel, that sort of thing. But it is not going to be easy if the fuel supplies run short out at Charles De Gaulle, Max.
FOSTER: OK, Jim, thank you very much indeed.
The traffic flowing for now, behind Jim, there in Paris.
Now coming up the London stock exchange is about to introduce the fastest trading platform in the world. Executing deals in less than it takes time to blink an eye. But does this need for speed make another flash crash more likely? We'll investigate after the break.
FOSTER: Welcome back. I'm Max Foster. You are watching QUEST MEANS BUSINESS. This is CNN. And we have got the headlines coming up for you.
The hospital treating Chile's rescued miners expects to release at least 10 more of the -- of the men today. And doctor say all 33 miners should be home by Sunday. And overall, the miners' health has been better than expected since they emerged from the collapse San Jose Mine. One who has eye problems and another with respiratory complications are said to have responded well to the treatments.
It's finally a done deal despite fierce opposition. A U.S. group has taken over Liverpool Football Club after court battles on both sides of the Atlantic. The club says the takeover eliminates all the acquisition debt brought on by the previous American owners. But those previous owners say the sale undervalues the club and they're threatening to sue.
Sources are confirming reports that Israeli government has announced plans to build 238 new housing units in East Jerusalem, despite pleas from Washington not to proceed. The announcement could be a blow to efforts to keep the Middle East peace process talks going. A Palestinian official immediately condemned the move, saying the Israeli prime minister has chosen settlements over peace.
Russia says it will help Venezuela build its first nuclear power stations. The deal was signed by Venezuelan President Hugo Chavez and Russian Prime Minister Dmitry Medvedev in Moscow today. President Chavez assured the world that Venezuela has no intention of building a nuclear weapon. In the past, Caracas has -- has bought millions of dollars of military hardware from Moscow.
And this just in to CNN. A U.S. -- the U.S. budget deficit is shrinking, but it's still the second largest on record. The shortfall in the public accounts comes to $1.3 trillion. That's down from last year's, which was more than $1.4 trillion. The new numbers from the U.S. Treasury are for the 2010 fiscal year.
Let's have a look at the -- the big board. That will be -- the Dow will be reacting to the desolate news. But so far, it's been reacting to comments by Ben Bernanke suggesting that there will be more stimulus in the economy. Also some corporate news coming. But it's down .3 of 1 percent currently. We'll see how that progresses as that deficit news sinks in.
Well, trading in the U.S. seems rosy enough right now, but do you remember this?
It was the sixth of May and QMB was live at the time. The Dow plunged nearly 1000 points, briefly raising $1 trillion in market value before recovering most of that lost ground.
It's now known as the flash crash -- the largest intraday fall on record. And we have since learned that it was cautioned by a single large investor using automated trading software.
Well, Richard caught up with Xavier Rolet.
He is the CEO of the London Stock Exchange, which now boasts the world's fastest trading platform.
He began by asking him if he thought the flash crash could happen again.
XAVIER ROLET, CEO, LONDON STOCK EXCHANGE: Well, obviously, this is an event that happened in the United States. And it's a question that both regulators and market participants, including the exchanges and other trading venues have sought to -- to answer -- provide an answer to.
Clearly, we are dealing with the consequences of the introduction of competition, resulting in fragmentation, atomization of trading volumes and some of these consequences are obviously unintended.
We haven't had such a -- a level of fragmentation in Europe, although we have such a -- a level of fragmentation in Europe, although we have been, as an exchange, fully exposed to competition, but have managed to retain, certainly in the -- based on the trading experience over the last six months, a market share in the region of...
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Right.
ROLET: -- 65 percent, which is not the case for the incumbent exchanges in the United States.
QUEST: But the inability for the exchanges on either side of the Atlantic to say that this could not happen again is quite worrying.
ROLET: Well, you know, we -- we do not believe that that would happen, certainly in the U.K., on the basis that the London Stock Exchange has retained and continues to retain over two thirds of the market share. So whilst there is competition and whilst there is pressure on fees and -- and this has, of course, induced us to modernize our technology and -- and innovate in other ways, we remain the central price formation venue...
ROLET: -- which is not the case in the U.S. The level of fragmentation there is extreme. So in the current environment, I'm comfortable in saying that this sort of occurrence is quite unlikely.
QUEST: And with your new turquoise trading platform, which at 100 and -- according to my notes -- 124 microseconds for a trade to be done -- I mean you -- you're caught between a rock and a hard place here. You get into gadgets to do the trade, but at the same time, the consequences of that in the future could be -- well, we -- we know they could be quite -- quite difficult.
ROLET: Well, latency in itself is neither a good or a bad thing. Clearly, since high frequency trading and other related forms of algorithmic arbitrage represents in the region of 50 to 60 percent of the total levels of activity on the stock exchange, these are clients, as well as -- as other clients. You know, we have to adjust our service offerings. We have to innovate and provide them with the technology that they need.
And in that context, as you mentioned, we have, last week, rolled out the fastest technology in the world, supported by Millennium Exchange, to put things into perspective. We operate at 99.9 percent confidence that at 124 microseconds, round trip, gateway to gateway, the flip of an eyelid is 200 milliseconds. So it's 2,000 times slower than the time that it takes to execute a trade on the London Stock Exchange today.
(END VIDEO TAPE)
FOSTER: The head of the London Stock Exchange speaking to Richard a little earlier.
Just to correct something that we were talking about earlier, the -- the deal signed between Russia and Venezuela. It was President Medvedev who signed -- who was involved in that deal with President Hugo Chavez.
Now, the pace of modern life has pushed many in Spain to skip the siesta. Up next, why one group thinks that catching some shuteye in a shopping center might help keep up the tradition.
FOSTER: Well, as business goes increasingly global, the Spanish siesta is at risk, would you believe?
In Madrid, a group called Friends of the Siesta have -- has come up with a novel way of keeping the afternoon break going, though.
CNN's Al Goodman has that story.
AL GOODMAN, CNN CORRESPONDENT (voice-over): These computers are trying to sleep their way to victory in what's billed as Spain's first siesta championship. It's something of a wake up call for a country that's become so fast-paced, that the traditional siesta is at risk.
DANIEL BLANCO, FRIENDS OF THE SIESTA ASSOCIATION: The modern life is a danger that we feel that is against the siesta. When you sleep in la siesta, everyone has the -- the image that your life is calm and you have a good life. And then the modern life is a tiring fact.
GOODMAN: Ready to save the siesta is nursing assistant, Sara Ruz, first eating a quick lunch and it's just the kind of rushing blamed for hurting the siesta.
(on camera): But a lot of people in Spain no longer sleep the siesta.
SARA RUZ, SIESTA CONTESTANT: Yes, because now the people work and nobody don't have time.
GOODMAN (voice-over): A doctor attaches a pulse meter just before she hits the couch, so the judge can tell whether she's really asleep. In this competition, siesta is limited to 20 minutes. The traditional siesta can last an hour or more. Hundreds of contestants are expected. They get extra points for snoring.
(on camera): This shopping center, where the siesta championship is being held, is a prime example of the changing times in Spain. These stores don't close at lunchtime, so instead of sleeping the siesta, people are working or shopping.
(voice-over): Siesta lovers complain that Spain's frenetic push to compete in the global economy means longer, more pressure packed work days. This visiting London market suggests says Spain can't have it both ways.
ASHRAF LAIDI, CMC MARKETS, LONDON: Yes, the Spanish are trying to basically to have their cake and eat it, too. They're trying to be very, very Europeanized and at least the part -- keep some of the traditions. Look, this is 2010. We're talking about the potential of a collapsing euro. We're talking about surging debt and people are still wanting to preserve the tradition of sleeping while the rest of the world is working?
GOODMAN: Spain's 20 percent unemployed might reluctantly have more time for siesta right now, but not this construction worker, who rarely takes a siesta, although he won the first round in the siesta competition.
FERMIN LOMINCHAR, SIESTA CONTESTANT: (through translator): The Spanish siesta is in danger because you have to work a lot to earn money here.
GOODMAN: Back on the couch, Ruz's 20 minutes are over, with barely a moment to savor the siesta's refreshing effect.
RUZ: First, I am -- I can be sleepy, because the down time before (INAUDIBLE) about them in 20 minutes, you're going to sleep.
GOODMAN: A grand siesta champ will eventually be chosen by the public, including Internet voting. There is a cash prize and lots of attention.
But will it be enough to save this Spanish tradition?
Al Goodman, CNN, Madrid.
(END VIDEO TAPE)
FOSTER: We'll ask Guillermo now, how does sleeping in the afternoon become a tradition?
FOSTER: I think it's good...
GUILLERMO ARDUINO, CNN METEOROLOGIST: I think it's...
FOSTER: -- but why is it...
ARDUINO: I think it's great. And I don't know if you know that JFK, John Fitzgerald Kennedy, used to take a 30 minute nap. And I know that in Japan, it's customary. It's not anymore for all of us. I don't take them. I loved them when I was in high school. I loved it.
Do you or not?
FOSTER: Well, I do -- I don't -- I don't get a chance.
You know in our job, we don't, really, do we?
But I have to say, sometimes I can wake up feeling worse from them. But I do think they're good.
ARDUINO: Oh, no. I don't agree. And before I go into the weather, I have to say something. If I don't sleep well, if I don't get my nine or 10 hours of sleep at night, I am a wreck the next day. So I...
FOSTER: We're never tired, anyone in the CNN newsroom, Guillermo.
ARDUINO: I know.
FOSTER: You should never say that.
ARDUINO: I shouldn't have said that, I think.
ARDUINO: Well, let me tell you now what's going on now with that typhoon that we have in the Philippines. See, we've been looking at this now already because it is taking general aim at Luzon. So it is a typhoon. You know, it's going to take that direction. Last night, it was slightly different, but the result is the same.
When I -- when I compare this map with what I saw last, some 10, 12 hours ago. It is going to be a significant typhoon. You see right before landfall it's going to weaken a little bit, to 241 kilometers per hour. I mean the Philippines, Luzon should look at this very seriously, should stay glued to CNN. We'll give you all the information. We have like three days until we start seeing evidence of bad weather over there.
In the meantime, Vietnam has bad weather, too. But it's not a tropical cyclone. But we see some more rain. It's been raining like crazy for weeks there.
Twenty-five in Hong Kong at this hour. If you're watching from there, it's 2:42 in the morning.
What are you doing up?
And, also, as I said, here in Vietnam, we're going to see a lot -- a lot of rain.
Also, we're monitoring what's going on in Cuba here with the passing of this -- it is a tropical cyclone. It's not that significant, but it is there. And also we already have a system over the Calcutta area here in India and we're seeing a lot of rain associated with it. It is a monsoonal depression, so it's a tropical low.
Also, in Australia, we see heavy rain in the forecast and probably the cold conditions is what's going to come up now for Sydney and Hobart. You see in Melbourne, also, even though we're transitioning into warmer weather, look, we already have some evidence, even though it's late at night, three in Hobart.
And it's springtime?
Well, it's going to go up all the way to 10, so we feel the difference.
Also, temps are going down in the Northern Hemisphere, but we can't anticipate it. We're expecting this, because it's that time of the year. Five to 10 degrees above average. I mean London is going to be fine. We will have high pressure in general, you know, the occasional rain shower. But we are going to see cooler conditions here and maybe the first snowfall of the season into the alps. So we start with the higher elevations, like we did in the north, and lately -- and later, we are going to see, Max, some more significant snow.
So it's the beginning of it. We'll see what happens -- back to you.
FOSTER: OK. We'll see how that one goes.
Thank you very much, Guillermo.
ARDUINO: Thank you.
FOSTER: This is QUEST MEANS BUSINESS.
I'm Max Foster in London.
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