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QUEST MEANS BUSINESS

Tunisia Declares State of Emergency; JP Morgan's Profits Up; Fear of Inflation

Aired January 14, 2011 - 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: Tunisia has declared a state of emergency. The president has reportedly fled the country.

A banking boom: JP Morgan's profits jumped.

And a test of nerves: Fears of inflation take hold.

I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.

Hello to you.

In an historic power shift Tunisia prime minister has taken control of the country as the president bows to pressure and reportedly flees after 23 years in power. With the head of the army by his side Prime Minister Mohamed Ghannouchi announced to the nation that he would become Tunisia's interim president. It comes after the now departed president declared a state of emergency. He sacked the entire Tunisian government and put a strict new curfew in place.

These were the scenes at the capital earlier. Thousands of people had gathered to call on the president to give up power. The streets of Tunis are now quiet as the army takes control. In less than two months these protests over unemployment have snowballed into regime change.

Unemployment, college graduates is where the real problems are; two thirds of Tunisian graduates can't get a job after leaving university. And you can trace these protests back to just one of them, Mohamed Wazazi (ph). He, himself, set himself on fire in front of a government building after police took away his fruit selling cart. His death was the spark that lit the touch paper of what has been called the Jasmine Revolt.

High food prices aren't helping either. There have been food riots in neighboring Algeria. President Ben Ali has promised to try to keep the price of staple foods down. Meanwhile the Tunisia stock market plummeted this week. Unions in the capital called a general strike. Schools and universities have been closed until further notice and Tunisian airspace is also reportedly closed with several countries telling its citizens to stay away.

The lightening rod for so much of this crisis has been 74-year-old President Zine El Abidine Ben Ali, now replaced by the prime minister. His whereabouts is still unknown. This, his first and last major challenge to his authority in 23 years in power. The last few days he had been increasingly making drastic concessions to try to stop the crisis, but ultimately even sacking his entire government was not enough to prevent today's events.

For more on today's protest, the escalating unrest in the North African nation we turn to Rima Maktabi. She is on the line from the Tunisian capital, Tunis.

Have the demonstrations stopped now the president's gone, Rima?

RIMA MAKTABI, CNN INTERNATIONAL CORRESPONDENT: Yes, the demonstrations stopped. The curfew started at 5 p.m., very early today. And at 5 p.m. there was a state of emergency announced in all over Tunisia. Now, even this may not be enough. We're hearing from political oppositions that they don't think that what has happened so far is constitutional.

Now, I won't get into the details of the Tunisian constitution, however, according the law here, it says that when the president flees the country or leaves his role, the one who takes over is the head of parliament, not the prime minister. However, what happened was an hour ago or even more the prime minister went on local TV channel, and the state channel, and expressed that he is taking over the country. The president has left the country and that he would prepare for elections. And according to law, to the constitution, elections should happen between 45 days from now, up to 60 days. So the coming hours may be full of more events here Tunisia, Max.

FOSTER: OK, Rima, thank you very much indeed. Back with you as the story develops. We understand that Tunis airport is under a lock down. We can speak to our Senior International Correspondent Ben Wedeman, who is there.

Ben, what's going on there?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Now, Max, the airport is essentially closed. It is ringed by soldiers, in fact, a bit truck full of soldiers just pulled up right in front of the airport. I think we were on the last plane into Tunisia. There are a lot of people milling around. Basically we have been told that because of the curfew and because of possible problems on the road into town that everybody has to stay at the airport.

Now, it was interesting, we arrived on a Tunis Air flight. Lots of Tunisians on board and as soon as the plane landed everybody's phone started to ring and they were getting all updated from all their relatives. By and large the atmosphere was one of a certain amount of relief. People were obviously concerned that the security situation in Tunisia was deteriorating dramatically over the last few weeks. And one man I spoke to says he thinks now Zine El Abidine Ben Ali gone, with the old regime possibly going to be swept aside, that things will get better but still people are a little unclear. It is not a very good welcome when you return to your country and find out that it is under a complete curfew and your airport has been taken over by the army, Max.

FOSTER: Ben, we're just looking at pictures form earlier. The situation has calmed down on the streets. But we know that certain holiday companies are trying to get the tourists out of the country. Does this mean that everyone is stuck at the airport if they want to leave, or otherwise?

WEDEMAN: Yes, all flights have been canceled. There is no where to go. Air space, I'm told, that Tunisian airspace has been closed as well. So that effort to get people out is going to have to be put on hold until the situation stabilizes and the airspace is open again, Max.

FOSTER: OK, Ben, at the airport. Thank you very much indeed.

Hopefully it will open up soon to help ease some of the pressure there. Let's get more analysis on the situation though. Jon Alterman is the director of Middle East Studies at the Center for Strategic and International Studies. He joins us now live from Washington.

Thank you so much for joining us. We knew there was a certain level of frustration in Tunisia, but we really didn't expect this, did we?

JON ALTERMAN, DIRECTOR OF MIDDLE EAST PROGRAMS, CSIS: We didn't expect it all. And in fact, Tunisia was an example for many Middle Eastern countries that you can make this sort of repression with economic advance work. Tunisia was one of the more repressive Arab countries, but it was also one of the richer Arab countries. And the people's idea of the deal is, well, if you give people enough money, you make them comfortable enough, you can do the repression. And what all the Middle Eastern leaders will be looking at, is to judge what is this mean for me? Was Ben Ali not repressive enough? Or do I have to peel back, because everybody wants to avoid Ben Ali's fate.

FOSTER: OK, let's just go through some of the dynamics that might be going on here. The government is suggesting that the opposition is fueling a lot of this. Is there anything to that you, do you think?

ALTERMAN: Well, there's not much opposition in Tunisia. And it is still unclear what this is a transition to. Is this a transition to basically the old regime without the corrupt family of the wife of the president in control? Or is this going to be a transition to a more democratic Tunisia? I think it is going to be several weeks until we even have much of a clue about where that is going.

FOSTER: OK, is it your sense that a lot of Tunisians accepted that they were loosing certain rights over recent years, because the economy was going well. And because the economy has turned down, they have suddenly realized they feel a bit repressed?

ALTERMAN: Well, I think it is broader. That there was this growing tension, we don't quite know what the role of social media was. There certainly was growing unemployment. The fact that commodity prices were going up, as they are going up around the world, could send a warning to Egypt and Algeria and Morocco, and a whole series of states around the Middle East, that as people's lives get squeezed, there is the possibility of this flame up that results in political change. We haven't seen a change in government like this in the Middle East, for many, many years. And most people had thought the Middle East had become coup proof. And it clearly hasn't.

FOSTER: We know that the police opened fire on some of the demonstrators that would have certainly fueled a lot of anger. Do you think the demonstrations wouldn't have been as angry if weren't for the police reaction? Are we talking here, really, about two sides facing off? Or is it, this is a generally-a genuine swell of opinion?

ALTERMAN: You know, I think when you are talking about police repression there are two ways the police can go. The police can be extraordinarily harsh and generally when police are extraordinarily harsh people pull back. Or police can be too lenient and then the people go forward. And the question here is going to be, as I said, for other Middle Eastern regimes, have the police been too tough, not tough enough? I think what happened is this regime had its legitimacy corroded, corroded, corroded, and at the end of the day, it just didn't have anything to stand on.

FOSTER: Thank you very much for joining us from Washington.

Obviously the Tunisian stock market doing extremely badly as a result of all of this, but meanwhile tech stocks in Europe and the U.S. are big gainers in today's trade, lifted by Intel's record results actually. When we return an inside look into the world's biggest chipmaker with a man who looks after Intel's operations in Europe, Africa, and the Middle East.

(COMMERCIAL BREAK)

FOSTER: Corporate America is making a solid start to the earnings season. Whether we are talking cash or chips, it all adds up to record profits. JP Morgan made $4.8 billion in the final three months of 2010. It is almost double what the bank made in the same period last year. The results beat market expectations and contributed to a record figure for the full year, at $17.4 billion.

The chipmaker Intel is also enjoying its best year ever, for 2010 at least. A record profit for the fourth quarter was the icing on the cake. Four-year profits came in at $11.7 billion, another record. Both of these companies are seen as bellwethers for the U.S. economy. Christian Morales is the vice president for Intel and looks after its operations in Europe, Africa, and the Middle East.

He brought along one of Intel's products when he came in to chat with me earlier. I asked him about the results.

CHRISTIAN MORALES, VICE PRESIDENT & GENERAL MANAGER, INTEL: Well, the top line was great. The revenues grew 24 percent, year on year, on the back of a strong PC growth, double digit growth in units, and the net profits were great, because we really went into very volume production of 32 nanometers, which is what we do with those very nice wafers here.

FOSTER: This is the business side, your business customers?

MORALES: This is both business and consumer.

FOSTER: So these are the big servers-well they were big servers. You used to have in the basement of an office building. This is what you are talking about.

MORALES: So, this one, this wafer is on servers, but you can also use it, for example, for net books. You can use it for notebooks. So, you will still have this technology that you are using for the different microprocessors.

FOSTER: OK, as you mentioned, more mobile devices, I need to ask you about this trend towards iPads, you know, and mobile devices. The concern is that Intel isn't in a strong position in that market. And you are just strong in PCs. How are you responding to that?

MORALES: The largest category in volume is in notebooks. It keeps on growing double digits, strong double digits, year on year. It will double in the next five years. So this is a very high volume category. The next category is one we introduced two years ago, which is a netbooks, which keeps on growing double digits. We shipped, last year, 37 million of them. And the tablets which have been around for several years, now they are with this very nice form factor, the iPad. And we're going to see 30, 35 of those coming up this year, different phone factors, based on inter- architecture, on the atom processor. So we are very excited about this.

FOSTER: But you are not in a strong position there compared with ARM Holdings, for example, are you?

MORALES: We have been a challenger in the last year or so. We think we have a very competitive offering now. A very competitive architecture, a strong eco system; a lot of software, the me-go (ph) software, the apps, applications that are being written around it. And we think you are going to see a very exciting offering of 30, 35 of those in the first coming months or in a couple of quarters. So, we are looking forward to this. And we think this is great for the consumers. This is great for the IT ecosystem as a whole. And the more content you have access to, the more storage you need to have at home and the more notebooks you need to have to work and store and share and communicate on this content. So, we think it is positive role.

FOSTER: What is interesting about your results, as well, is that PCs are still a very strong market for you? And more and more people seem to be using PCs. They are not dying quite yet.

MORALES: There is only a couple of billion people accessing the Internet today. There will be another billion added in the next four, five years or so. Notebooks are going to be very important for accessing the Internet. Netbooks and some other companion devices, like the tablets, for example, but you will definitely see the notebooks which you use for developing content, a rich content, which is what the users want. And those will certainly be meeting the expectations of those users. And we are going to see a strong double digit growth going forward.

FOSTER: OK, what are you saying about your future results, if anything to give us an indication of how the industry is looking right now.

MORALES: So, the PC segment is due to grow double digit in 2011 and in 2012. So the prospects are good. And within this environment we think we are going to grow 10 percent annual growth (ph) in 2011. So it we see a lot of exciting opportunities. On top of the PCs we have the adjacent segments, that we are working on. Like consumer electronics. Consumers want to have access to the television, but they want to have access to the content they would like to have access to.

And this will come through the smart televisions. The televisions, interestingly enough they are becoming bigger, and thinner and flatter. But they are also becoming smarter. And you have the next generation set top boxes that allow you have access to your own content, and to the content you decide to watch. So those are trends that we see as very positive, that will give us opportunities beyond and on top of the PC growth opportunities, to keep on growing.

(END VIDEOTAPE)

FOSTER: That is the view from Intel, after those extraordinary results. And that earnings report from Intel is keeping the tech sector afloat really during trading in the U.S. What about the broader market, though? Let's go to Alison Kosik at the New York Stock Exchange with her look at the numbers.

Hi, Alison.

ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Hi, Max.

We have been watching stocks kind of do a 180 from the open. Earlier at the open we saw a sell off, now stocks are higher. Intel, believe it or not, those shares not helping; Intel shares are down about 0.75 of a percent. But the financial sector definitely is bringing up the Dow. And we are also watching the S&P 500. It is kind of testing the high of the day, but there is some technical resistance near the 1290 line, for the S&P 500.

As of now, the blue chips are up by the triple digits for the week. And if we hold on it will mark the seventh straight week of gains for both the Dow and the S&P 500. It is also beginning to be a very solid start to the year with the S&P 500 up more than 2 percent over the past week. Now looking a little closer at JP Morgan shares, I'll tell you what, investors are feeling good about JP Morgan's results. The stock, right now, is leading the Dow 30 and lifting the financial sector. Shares of JP Morgan are up 2.5 percent. You know the bank is the first of the financial titans to report. Next week we'll hear from many others including Citigroup, Bank of America, and Wells Fargo.

Max, back to you.

FOSTER: Strong figures, Alison. Thank you very much indeed. Now we talked about inflation, but it is not just China that is worried about that right now. Rising food and energy costs are having an impact across the world, including India. And it looks like it is something we are going to have to get used to.

(COMMERCIAL BREAK)

FOSTER: How sharply higher fuel and food prices are contributing to living costs around the world. And figures out today reveal that U.S. consumer prices rose a greater than expected 0.5 of 1 percent in December. It was the biggest increase in 18 months. It was, however, some good news. The so-called core rate, which strips out volatile food and energy costs, was up just 0.1 percent.

Here in Europe soaring energy costs have pushed the inflation rate to 2.2 percent. That is the fastest pace in 27 months. Just yesterday the ECB President Jean-Claude Trichet said he expected Euro Zone inflation to remain above the banks 2 percent target in the short term. But he also warned the ECB is prepared to raise interest rates if necessary.

But it is in India were rising food prices are causing the biggest headache right now. The country's wholesale price index surged and annualized 8.4 percent in December. That is up a whole percentage point on the November figure. Analysts say the Indian central bank may soon be forced to raise interest rates to keep a lid on runaway prices. It meets at the end of this month. And earlier I spoke to CNN Correspondent Sara Sidner and asked what was behind this jump in prices?

(BEGIN VIDEOTAPE)

SARA SIDNER, CNN INTERNATIONAL CORRESPONDENT: Well, the government has been blaming weather related crop damage for these high, especially the food inflation rates, but analysts, if you talk with them, even the president of the World Bank. They say it is something else. They really believe that it is the bottleneck on the supply chain side that has created this problem. All in all, though, the food inflation numbers are very, very high. They are the highest in any major Asian economy.

India is dealing with inflationary numbers that have gone up more than 16 percent in 2010, and if you look at this country you have hundreds of thousands, hundreds of millions, even, of poor people who really cannot afford this kind of price rise, especially in vegetables, things that are absolutely necessities, absolutely necessary commodities. So there is a lot of people who are very upset with this and they want the government to get on it and change these numbers, especially when it comes to food inflation, Max.

FOSTER: Yeah, in terms of the general inflation figures, it has already put interest rates up several times, hasn't it? The central bank, I presume has to keep doing that to keep control of these rising prices.

SIDNER: And what we are expecting is that by the end of the month they believe the central bank will raise interest rates and it is something that the country doesn't really want to do, the government itself doesn't really want to do. They don't want it to infect investments, but they are going to have to look at this because these inflation rates just won't come down. It is not only happening here in India, but in other parts of the world. But it is particularly acute when it comes to those food inflationary prices here.

And the government has to account to the people, as you may know this. There were two governments in the past, in years past, that actually fell due to onion prices. They called it the Onion Crisis, and it has happened twice in this country, the onion prices, again, a big issue here. Onion prices skyrocketed over the past couple of weeks. They were able to bring them down just a bit, but that is an essential commodity. Onions are used in curries and most of Indian cuisine. And so when prices of something that someone uses every single day, when they notice those spiking there is real trouble for the government. The government has to look at that and try to do something to bring it down.

FOSTER: Perhaps, then, it is a temporary problem, is it? You know, if it was just-over the last year there was so much bad weather, prices went up. Maybe it won't be as bad next year.

SIDNER: That is the thought, that that is what is going on. Otherwise, the government has also said that it is going to take some measures. They said that they are going to crack down on anyone who might be manipulating these price, i.e., people who are hoarding some of this, trying to get a higher price for their produce, for example. They also said that they would continue to ban the export of certain items. Right now it is onions. Then they said the would buy more essential commodities like lentils and cooking oil. So they are taking small steps. Analyst say those are very minor steps and they don't see that having a major effect on the inflation rates right now. But they are taking some steps to try and combat this.

(END VIDEOTAPE)

FOSTER: Sara Sidner, there.

Now, when we come back.

(BEGIN VIDEO CLIP)

(EXPLOSION SOUNDS)

FOSTER: We take you on an exclusive journey, deep inside one of North America's biggest gold mines.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

FOSTER: Welcome back. I'm Max Foster. You are watching QUEST MEANS BUSINESS. We are going to check the news headlines. It's relating to the situation we've been telling you about, Tunisia.

A plane carrying the Tunisian president, Zine El Abidine Ben Ali, has been allowed to use Maltese air space, we understand, and is heading toward France. A spokesman for Malta's foreign affairs ministry told us that today. And it does clarify the situation that the president -- he is still officially president, I think, is out of the -- the country and we now know that he is heading toward France. So we're going to get new details on that from our French office and also from our correspondents in Tunisia.

We're going to speak now, though, to Ian Lee.

He's a journalist in Cairo, because, Ian, I gather you've got some news on how the Tunisian situation is now being reflected there.

IAN LEE, JOURNALIST: Yes, the -- right now, the opposition has gathered in front of the Tunisian embassy. They're calling -- they -- they're calling for a revolution in Egypt reflecting on the revolution or the -- it's not so much a revolution, but Ben Ali leaving Tunisia. They kind of want the similar -- something similar to happen here. Right now, they're calling "Down with Hosni Mubarak" and they're -- they're, you know, their frustration from the parliamentary election. And they're trying to kind of hold onto what's happening in Tunisia and reflect that here in Egypt. The government here will definitely be watching the situation over there, not wanting any similar to happen here.

FOSTER: From what you know about the situation in Tunisia, are there similar frustrations in Egypt or are Egyptians just using this as an excuse to protest about their own frustrations there in Egypt?

LEE: Well, there's definitely similar frustrations here. Unemployment is high and wages have been something that the opposition has been fighting for for a long time. The minimum wage is extremely low, below the poverty line. And so what opposition groups are trying to hold onto is that frustration in Tunisia, bring it here to Cairo -- or kind of galvanize people here in Cairo.

And going back to the -- the parliamentary election that was just recently, there was a lot of allegations of fraud in that election. And the opposition -- a lot of the opposition pulled out of the run-off. And I think they're trying to hold on -- they're trying to use now that frustration and, you know, with -- with the -- the parliamentary election and try to galvanize Egyptians here.

FOSTER: Ian Lee, thank you very much.

It's turning into a North African story, isn't it?

Here is the latest breaking news on Tunisia. A plane carrying the Tunisian president has been allowed to use Maltese air space and is heading towards France. A spokesman for Malta's foreign affairs ministry told us that, so we can confirm he's left the country. He's heading toward France.

We're back in a moment.

(COMMERCIAL BREAK)

FOSTER: Let's bring you up to date with this Tunisian situation. Tunisia is under a state of emergency and a curfew is in effect there. It follows a show of force against protesters in the capital. Now, the prime minister said he is now the interim president. He's taken over from President Ben Ali. And we have found out very recently that the president has used Maltese air space. So he is out of the country. And we understand that he's heading toward France.

We're going to get you what information we can for you from France. And we're following the situation on the ground in Tunisia, as well. We understand that some sympathy demonstrations or, you know, demonstrations are being held in Egypt. So it's starting to affect other countries, too.

Meanwhile, gold is losing some of its shine. Prices have fallen more than $14 in the last day. Investor demand for the precious metal is softening after China announced new steps to fight inflation. But gold is still selling near record highs and miners increasingly have their work cut out.

CNNMoney.com's Poppy Harlow traveled to Nevada for an exclusive look inside one of North America's largest gold mines.

She joins us now live.

It sounds like a great trip -- Poppy.

POPPY HARLOW, ANCHOR, CNNMONEY.COM: It was -- it was a fascinating trip, I'll tell you. I had no idea how gold was mined in this country. It's very different than what you might think and very different, certainly, than panning for gold.

But, Max, what we did is we went to rural Nevada to see a huge mining operation there, Cortez Mine in Nevada. It's -- Nevada is a huge mining state in terms of the U.S. and also globally.

And Barrick Gold is the company. They operate 25 mines all across the globe in Africa, South America, also North America.

And we went two miles deep with them to see exactly how they do it.

Take a look.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Your self-rescuer is going to go probably on your right hand side.

HARLOW: (voice-over): We're gearing up to go two miles deep into one of the biggest gold mines in the country.

(on camera): I can't believe we're two Empire State Buildings down below the surface of the earth.

(voice-over): And we still have quite a ways to go. Hunting for gold goes all the way back to 4,000 B.C. and today, the obsession continues.

Here in Barrick Gold's Cortez Mine in rural Nevada, more than one million ounces of gold were mined last year alone. That's over a billion dollars worth.

UNIDENTIFIED MALE: Geology has figured out where the pod bore is then they just point us toward it.

HARLOW: But finding gold these days is much more complex and expensive than just, well, panning for it. In fact, you can't even see the gold in this mine.

(on camera): I mean it's amazing to me to think that this is gold, but it is.

UNIDENTIFIED MALE: Yes.

HARLOW: It's right -- it's right here.

UNIDENTIFIED MALE: Yes. You can't see it. It's microscopic.

HARLOW: (voice-over): Miners have to drill and blast through layers and layers of rock to reach the gold.

RANDY HAGER, MINER: There's gold in this and what I'm going to do is turn this into a -- a pile of muck.

HARLOW: It looks like dirt, but muck is actually gold ore -- tiny particles of gold that will eventually make up a gold brick.

HAGER: I'm going to get about 10 truckloads out of here, 10 ounces of gold, 10 to 15, at $1,400 an ounce. And we'll do this several times during a day's work.

HARLOW: Not bad money.

HAGER: Not bad money.

HARLOW: So after the gold ore is mined, about 400 tons of it goes in massive trucks just like this one. Of that, only four ounces is pure gold. It's taken, it's crushed, then it's taken in the mill and then it's refined.

UNIDENTIFIED MALE: After the ore is crushed and ground, we leach the gold out. From there, we put it into a pressure cooker environment -- high temperature and pressure with various chemicals and it pulls the gold out. And this is the final step before pouring the gold bar.

HARLOW: Barrick mines gold for around $300 an ounce and gold is selling for record highs, around $1,400 an ounce. Those big margins mean jobs -- something desperately needed in Nevada, a state struggling with the highest unemployment and foreclosure rates in the country.

JOHN ALEXANDER, SHOVEL OPERATOR: I can provide for my family, you know. And I don't know any other job in this world that can -- I get paid for what I get paid and survive now these days, the way the prices are.

HAGER: There's job security here with gold that high. We're not going to run out of work.

(END VIDEO TAPE)

HARLOW: And, Max, at that mine alone, where we spent a day, there are about 1,000 workers. And Barrick Mine, more than a million ounces of gold there. Globally, they've mined eight million ounces of gold in the last year. They're trying to push that higher to nine million in the next five years, the biggest gold mining company in the world.

But when you talk about what this means for a state like Nevada, that in the United States is suffering the highest foreclosure rate, highest unemployment rate, this is a bright spot.

When you look at mining towns in Nevada like the one we were in, they have an unemployment rate, Elko, Nevada, for example, around 7.5 percent. When you look at broader Nevada, they have an unemployment rate at around 14 percent. So mining, that industry in a state that's struggling so much is, is really one of the few bright spots and all the workers I talked to said they really are crossing their fingers that this gold boom doesn't end any time soon, because this is providing them a very, very good living, strong wages for them -- them to live on -- Max.

FOSTER: And what a boom it's been.

Poppy Harlow, thank you very much, indeed, for that.

Fascinating stuff.

Now, as we heard earlier, China is ramping up efforts to tame inflation. Its central bank is raising lenders' required reserves to help pull money out of the economy. Steps are also being taken to make the yuan a -- a world currency.

For the first time, Chinese firms will be allowed to invest in -- invest renminbi overseas. It's not about a plan to reduce China's dependence on the U.S. dollar when it invests abroad.

It remains to be seen whether foreign firms will want to be paid in the Chinese currency. Right now, they can use the yuan only to buy goods from China or invest in low yield Chinese financial products. The yuan has just hit a -- a new high against the U.S. dollar ahead of a visit by Chinese president, Hu Jintao, to Washington. Currency issues are -- are sure to be high on the agenda when Mr. Hu meets U.S. president, Barack Obama next week.

We'll be following that for you.

But meanwhile, we're going to go to the Weather Center, because Guillermo has got his hands full -- Guillermo.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Hey, Max, you know, I don't know if you notice, that things are much warmer right now in Europe. And the concern of the floods continues here in this area. And see the -- the area of more moderate conditions continues to expand throughout the weekend. Russia is now left alone there, along with some parts of Finland.

In the meantime, the other concern, in the west especially, are the winds. And we have some rain. You see some bad storms here popping up into Belgium and the Netherlands. But apart from that, Central France, some rain; the winds, again, as I was saying, that are going to be, in the next 48 hours, quite intense, especially in Northern Ireland, in Scotland. And here the same areas all the way to Denmark.

That means that if you are flying out of or into these areas, you may find some delays at the airport.

So bear in mind that it's going to continue to be breezy. Right now, close to 20 or 22 kilometer per hour winds in Berlin. This -- these are current winds, as you see over there. Seven only in Manchester, but is going to go up in speed.

So, see, mild conditions in the west, cold. By Saturday, it will be more into this area, into the northeastern parts of Europe. Don't think that this is going to be all nice, because we are going to see rain showers and winds. But it's not going to be the cold that we saw weeks ago.

So Spain in the clear. Italy in the clear, that makes rain and finally gets a break. But Turkey still with some clouds.

So individually at airports, you see winds -- Charles de Gaulle, Amsterdam, Dublin, Brussels, London, Heathrow, Frankfurt and then all the other airports appear to be fine. In Spain, Italy -- Italy and Spain, you know, I told you it was going to be fine.

So here we go. Fifteen in Rome the high for Saturday, but the cold prevails in Stockholm and minus three. Glasgow, 10 degrees. The same thing going on in the United States, though we have still 48 states with snow. The cold previously in the north. You see these are all the same. Even Florida had some, but now the snow is gone. It's 48 so that's a glitch when it's updated.

But let me tell you what's going on with the Upper Midwest and Canada, where we see some snow. Chicago may see some snow. Here, the extreme New England states and also the snow is easing as we see in the last hours in Brunswick and in Newfoundland in Canada. So things are getting better there, as well.

Throughout the night I'll continue to update you on the weather in Asia, coming up next.

In the meantime, London, back to you.

FOSTER: OK, Guillermo.

Thank you very much.

ARDUINO: Thank you.

FOSTER: We've got some new news just into us, business news this time.

BP has confirmed that it's in discussions with Rosneft relating to a possible arrangement. A further announcement is to be made later today. Bob Dudley, BP's new chief executive, has been in Moscow today and held talks with Vladimir Putin, the Russian prime minister. Quite a turnaround for BP's relationship with Russia and Bob Dudley's, in particular.

Details on that as we get them.

QUEST MEANS BUSINESS is over for now.

I'm Max Foster in London.

"WORLD ONE" is coming up.

We're going to have "MARKETPLACE AFRICA," though, first.

(COMMERCIAL BREAK)

ROBYN CURNOW, HOST, MARKETPLACE AFRICA: This is MARKETPLACE AFRICA.

I'm Robyn Curnow here in Johannesburg.

This week, we're going to take an In Focus look at a company called Dial a Nerd. It's essentially a call out computer repair service -- a lucrative business in a country where people are more likely to have their computers fixed than to buy a new one. Nkepile Mabuse has the story.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Thank you for calling Dial a Nerd.

How can I help you?

NKEPILE MABUSE, CNN CORRESPONDENT (voice-over): They proudly call themselves nerds, promising to sort out your computer problems within 72 hours. South African I.T. support company, Dial a Nerd, is the brainchild of 32-year-old Colin Thornton.

(on camera): Colin, it's my understanding that you've been fixing things since you were very little.

COLIN THORNTON, OWNER, DIAL A NERD: As far back as I can remember. And not just computers. I've been fixing stereo systems and TVs and breaking things more often than not.

MABUSE: And then you went to university to study computers.

THORNTON: I did.

MABUSE: And then what happened?

THORNTON: It was a natural decision. I went to Vitz (ph). I lasted about eight months. And I decided that the course was -- was -- was a bit out of date, a bit boring. And I decided I wanted to drop out. And the only thing I could do was fix computers, so that's what I did. I turned it into a business.

MABUSE (voice-over): Twelve years later, Dial a Nerd is one of South Africa's most recognized names in I.T. support, with an estimated turnover of $6 million a year ,according to its owners.

MATTHEW OUZMAN, TECHNICIAN, DIAL A NERD: Hi, Michelle (ph).

It's Matthew from the Nerds. We're outside.

MABUSE: Matthew Ouzman is the company's Apple Mac expert.

OUZMAN: Good afternoon, Michelle.

I'm Matt from Dial a Nerd.

MABUSE: Today he's responding to a wireless network problem at a suburban home in Johannesburg.

UNIDENTIFIED FEMALE: This is the main station over here.

OUZMAN: OK. So this is where your meter is?

UNIDENTIFIED FEMALE: Yes. We've got the -- the...

MABUSE: But no job is ever about one specific problem.

(on camera): She asked you for other things, as well, even the small little things.

OUZMAN: That generally does happen. You know, while you're here, can you look at my anti-virus. My e-mail is a bit slow. I'm having trouble scanning. And that's always a great business opportunity, because I will see people by the hour and we're here to help the client. So at the end of the day, if our one hour job has turned into a two hour job, we've made some more money and we've solved the clients' problems that well we didn't actually come out to do.

MABUSE (voice-over): House calls like this one cost $50 per hour, while small businesses are charged over $60. Thornton says when he started his business, he focused on what he saw as the abandoned customer.

THORNTON: A lot of my competition, a lot of computer companies were not interested in Granny Smith (ph) down the road or, you know, Old Man Tin that -- that wanted his desktop color changed. And I was very happy for that type of business. So I took it and I took it. And I actually found that some of my competitors were passing me that business because they wanted to deal with big business and they wanted the big contracts and to sell servers and make more money in less time, whereas I decided that this was a niche and then I -- and I kept at it.

MABUSE: And keeping at it has paid off. He now employs over 100 people and boasts 35,000 clients. And as technology has evolved, so have the problems Dial a Nerd responds to.

OUZMAN: People have been coming more and more in touch with things like their BlackBerrys, their iPhones. You know, a granny gets recommended by her grandson in Australia that, oh, you've got to get this BlackBerry and we can chat all day. And they get this fancy BlackBerry and they've got no idea how to use it. So we're starting to do a bit more of that.

People are becoming more in touch -- not with just technology with computers, but with technology, as well.

MABUSE: While the company has more competitors today than when it first started in 1998, for as long as technology keeps improving, there will most certainly always be a need for someone somewhere to dial a nerd.

Nkepile Mabuse, CNN, Johannesburg.

(END VIDEO TAPE)

CURNOW: Let's take a look at some numbers.

Now, Dial a Nerd estimates that the life span of a computer here in South Africa is about four to six years compared to two years in the developed world. They also say that about 5.3 million people own a computer here in South Africa. That's 11 percent of the population.

Up next, what's the outlook for 2011?

Our next guest is positive about Africa's potential in the coming year.

But will the predictions come true?

(BEGIN VIDEO CLIP)

ZAIN VERJEE, CNN INTERNATIONAL ANCHOR: And no pressure on this next question, but where do you see the biggest short-term growth?

RAZIA KHAN, STANDARD CHARTERED BANK: Well, it's really just a question of numbers.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

CURNOW: Our guest on Face Time this week is Razia Khan. Now, she's an expert on Africa's economies as the head of African research at Standard Chartered Bank.

Zain Verjee recently sat down with her to get her analysis of the year ahead.

(BEGIN VIDEOTAPE)

VERJEE: How do you see the outlook for Africa in 2011?

What are some of the key things we should look for?

KHAN: Generally it's positive. Our belief at Standard Chartered is that trend growth in Africa will continue to recover. Of course, after the global economic crisis in 2009, we saw better rates of growth in 2010, but not yet back to trend.

In 2011, there is a chance that we will get that much closer to those pre-crisis trend growth rates we were looking at 6 to 7 percent growth in a number of frontier market economies. And that is the key expectation.

Of course, there are risks to this scenario. There's been a lot of press about the rise in food prices. We're looking with a special concern in East Africa and potentially adverse weather conditions that may prove to be a setback to growth and, of course, political risk has featured very strongly at the start of the year, as well.

But assuming all goes well, we are seeing good, sound growth prospects in a number of economies.

VERJEE: What are you basing that kind of optimism on?

KHAN: Part of it is that Africa's growth momentum was doing pretty well even before the crisis. So, yes, we saw an interruption with the global economic crisis. No question about that. But Africa has come out of that crisis a lot better than many had expected.

VERJEE: Because they weren't as highly leveraged?

KHAN: Part of it has to do with the amount of leverage in the system. A lot of it has to do with China and the strength of China, and, of course, the support that that has given to commodity prices.

VERJEE: You mentioned China. Talk a little bit more specifically about how China and Asia has helped in the recovery in Africa.

KHAN: Well, certainly we've seen very imbalanced growth in the wake of the crisis. We have continued to see a recovery in Asia. Most Asian emerging markets not only making good in the losses associated with the crisis, but seeing real growth, real value addition beyond that.

Now, that, of course, has been a key support for Africa, although Europe, mostly the core of the euro area remains the key trading partner for Africa. We have seen great trade gains with the rest of the world, especially developing Asia, especially China.

And that has been a big source of support to African economies' performance.

VERJEE: And no pressure on this next question, but where do you see the biggest short-term growth?

KHAN: The countries that took a big hit during the crisis, the oil producers, simply because of their -- the base impact, they had to cope with lower oil prices, in some instances, lower oil output, as well. This is where we're looking to see most of the exciting growth in Africa.

A number of countries emerging for the first time as an oil producer, Ghana probably leading the way. Ghana expected to achieve 12.3 percent growth in 2011. Uganda, the oil production is still some time away. And, of course, there has been the tax dispute, which has held up the timetable to oil production there. But we should see positive momentum as we get closer to production.

VERJEE: One thing that could scuttle (ph) things and has in the past is the political situation in -- in a lot of these countries. 2011 is a big year for elections in Africa. They may even have another country. You know, we'll find out, you know, pretty soon.

How -- to what extent do you think politics is going to be a really key factor in 2011?

KHAN: Well, just in case anyone had thought the environment was more benign, for whatever reason, the events in Cote d'Ivoire have certainly acted as some sort of wakeup call. Of course, we've got the big events happening early on in the new year, the referendum in Southern Sudan. This is going to be watched very closely.

Political risk hasn't gone away. We could see a reshaping of the East African landscape. It's how the political players react to whatever emerges from that referendum that is going to be key to economic prospects.

And then, of course, in West Africa, in Nigeria in April, another very important election, the passage of which could be a key driver of investor confidence -- local investor confidence initially, foreign investor confidence in time.

So there are these big political events that are going to be closely watched.

VERJEE: For the average person who just is interested in Africa, wants to invest, what kind of advice would you give them?

KHAN: Well, there are still very good growth prospects in Africa. One of the successes, of course, was that we hadn't seen negative growth across the region as a result of the crisis. Yes, a con -- a contraction in one or two economies -- South Africa being more exposed to the global economy, a few of the mining economies. But in general, most African countries managed to sustain some kind of positive growth. And those growth rates are picking up.

(END VIDEO TAPE)

CURNOW: Razia Khan there from Standard Chartered Bank, giving us her predictions for 2011.

Now, here's what's trending this week.

(BEGIN VIDEOTAPE)

CURNOW (voice-over): Continuing that positive outlook for Africa, there's word of more Asian investment for 2011. First in Zambia, where China invested more than a billion dollars last year and could invest another billion this year. That news comes during a visit to Zambia by China's vice premier.

And Zambia also hopes to reach cooper production levels not seen since the '70s, with the help of foreign investment and increased amount from China.

And India's largest trading house has set up offices in Johannesburg. MMTV says it wants to, quote, "cut out the middle man" and buy coal, gold and diamonds directly from South African mining companies to export to India. India, expanding as rapidly as China, has a huge demand for coal and was the largest importer of gold last year.

(END VIDEO TAPE)

CURNOW: You can find us online at CNN.com/marketplaceafrica.

But that's it for this week.

I'm Robyn Curnow here in Johannesburg.

Goodbye.

END