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QUEST MEANS BUSINESS
Too Quiet for Comfort; India's Open Market; The Cost of Saying Goodbye; Belgium Downgraded by S&P; Italy Forced to Issue Bonds; Strike at Heathrow?
Aired November 25, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Belgium being bashed -- a debt downgrade runs right on the E.U.'s doorstep. Chaos at the border. Heathrow warns strike action next week. Huge delays probable. Now those at the ready, Black Friday in the U.S. and there are bargains to be had. I'm Richard Quest. I mean business.
Good evening. S&P has this evening downgraded Belgium by one red -- one credit rating notch to double-A. The agency says the Belgian government simply won't be able to stop its debt from rising as private sector investors and trading partners start to pull out.
There are problems, of course. They believe that there will have to be a recapitalizing of more banks and that will be higher sovereign debt. That lower growth will bring lower tax receipts. That will lead to higher sovereign debt and they say they need a government. The finance minister says it's due to a global loss of confidence.
Belgium's prime minister Yves Leterme needs to find a new permanent government, and has said tonight he urgently wants to set a budget. There are distress signals sounding loud and clear right across the bond market. Italy today was forced to pay through the nose for short-term debt. Join me at the super screen and you will see what I mean.
Today, Italy had to offer a record 61/2 percent for 8 billion euros of six-month bonds. Compare and contrast that, bearing in mind it's only six- month money, this. So this is the sort of money that's constantly -- this is the paper that's constantly rolling over in the market. It's always coming due. There's a -- there's an avalanche of it, in one way.
But a month ago the yield on similar dated bonds was just 31/2 percent. So, not surprisingly, the news shook already rattled markets. The 10-year Italian bond went up to 7.3 percent. And the two-year -- let me just make a note of these numbers, because we're going to talk about them in a second.
The seven-year bond was at 7.3 and the two-year was at 7.2. Now what's the significance of that? The fact is short-term money in Italy is now more expensive than the longer term stuff. And I want to explain and show you why that is important. Bit of an economics lesson perhaps. But this is the significance of what is happening at the moment.
This is the -- oops, let's clear it up and make it look a little prettier. This is your ordinary graph of yields. This is six-month, one- year, 10-year, 20-year, 30-year. This is the price that you have to pay. Now, normally, in normal circumstances, the yield curve looks like that, a thing of beauty, a wonder of joy. It's more expensive to borrow, of course, the longer out you get.
What's happening in Italy is exactly the opposite at the moment. The cheaper money is now longer term. It's known as an inverted yield curve. And what it tells us -- and we'll talk more about it at the moment, when you see that, it's that Italy is in some serious trouble indeed.
Let's take a look at where we stand across yields in Europe at the moment. Italy, Spain are higher; France dips slightly. The U.K. yields have risen back just above Germany. U.K. was lower yesterday for the first time since 2009. Banks rose for a second session, albeit just (ph) four. Commerce Bank up 2 percent, shares linked to oil also rebounded. All down for the week as a whole.
Joining me now is Holger Schmieding, chief economist of your Berenberg Gossler & Co., Germany's oldest private bank. The inverted yield curve -- I never thought I would talk about inverted yield curves and doing graphs, I know (ph).
QUEST: But the fact that it's happening with Italy is a really -- a warning signal now, isn't it?
HOLGER SCHMIEDING, CHIEF ECONOMIST, BERENBERG GOSSLER & CO.: Yes, it definitely is. It tells us the market is expecting something strange to happen in Italy in the near future. They may have to ask for help. Maybe there's a fear that Italy might actually be bankrupt in the near future. It's just a fear but the market is telling us there is clear stress in Italy.
QUEST: Because I can't remember too many occasions of inverted yield curves that don't end badly. I mean, unless it unwinds itself pretty quickly, this is the canary in the mine.
SCHMIEDING: Well, there are inverted yield curves and which just show that a central is fighting inflation. If the central bank has rates up here, yes.
QUEST: (Inaudible) Mercator (ph).
QUEST: This is not the case.
SCHMIEDING: Well, the central bank (ph) which has a rate at 11/4.
SCHMIEDING: . it will probably cut it to 1 percent. To then have a short yield that high for Italy, that is a sign of distress, and it doesn't have to end badly. But it tells you we have to do something, otherwise it might.
QUEST: OK. Germany, we saw rates -- I mean, I don't know if we can still have that nose (ph), numbers showing what rates are in Europe, again at the moment. Germany's rates are over, as we look, 2 point -- 2/14 percent. So over -- on the 10-year. I mean, that's quite a high level for -- you're smiling. Who's to blame?
SCHMIEDING: Well, 21/4 is not a very high level (ph).
QUEST: For Germany, it is.
SCHMIEDING: Not even there. German inflation is above that level. It's still a negative real yield (ph) for Germany. But relative to where it was, of course, a week ago, it's a bit higher than that.
QUEST: But also the importance of it is that it's a bellwether. It is the backstop. And you would expect that to be the cheapest, or at least the most -- the most stable. It's a safe haven bond.
SCHMIEDING: Well, the one thing that is strange here is not the level of Germany. It's the reason why it rose over the last few days, and that was this failed German bond auction. And that, indeed, is a warning signal, that even Germany is not completely immune to contagion.
(Inaudible) technical risk, the technical (ph) factors to blame for that failed auction -- low coupon. But it's still is a warning signal.
QUEST: (Inaudible) no coupon. They were determined not to raise it, weren't they? They were determined -- and they could have got it away.
SCHMIEDING: Well, they should have raised the coupon (inaudible).
QUEST: They could have raised the coupon.
SCHMIEDING: . now they'll have to.
QUEST: . and now (inaudible) -- OK. Finally, let's just put this in perspective. How far, Angela Merkel, how far does she -- oh, I'm the Bundesbank, as she was saying, today bear the blame for what's happening at the moment?
SCHMIEDING: Well, it is Germany which is the major mover in the euro crisis. Germany does not want the central bank to be the lender of last resort. It's trying everything else but that. And there's no other solution but the ECB is likely to work. Of course, the German insistence on trying everything else first is now making the crisis much more severe.
QUEST: Does it get worse before it gets better before the end of the year?
SCHMIEDING: It probably has to get worse before the Bundesbank relents and steps in and only thereafter can things probably get better.
SCHMIEDING: It may happen soon.
QUEST: Have a good weekend, as best one can in these circumstances.
In a moment, if you think immigration queues at airports are bad enough, wait until you hear Heathrow's warning for next week. I've got the letter from the airport. They are talking about gridlock, no available parking, mass cancellations. And that's the good news.
QUEST: You can come to the gate, but be prepared to wait. The world's busiest international airport is telling its airlines to cut capacity in half or face gridlock next Wednesday. That's when 21/2 million public sector workers, including U.K. border control staff, are going on strike over pension reforms. Heathrow's chief operating officer has warned of 12-hour waits to pass through immigration.
Normand Boivin told airlines that delays are likely to be so long that passengers could be not safely accommodated within terminals and need to be held on arriving aircraft. He says this, in turn, would quickly create gridlock with no available parking stands, diversions to outside the U.K. BAA, that's Heathrow's owners, which, of course, is part of Ferrovial, is also stressing this message.
If you join me in the departure lounge, you will see BAA is saying we are very concerned by the impact that this strike will have on passengers at Heathrow and they are discussing plans on how to minimize the impact on our passenger.
British Airways, which is the dominant carrier at BAA, has said there will be significant risk of severe delays passing through passport control. Now bearing in mind, they will continue a normal schedule.
But all these big 747s and triple-7s arriving from the United States and from Asia, disgorging tens of thousands of people into Terminal 5 and all the other terminals, that is going to have a risk of severe delays. Virgin Atlantic has described themselves as being very concerned, and describes it as another serious kickback for U.K. PLC.
Virgin says that Britain cannot afford to be closed for business. And all the major airlines, indeed, are saying that passengers should seek alternatives, basically don't come to Heathrow next week. It's not only Heathrow that is going to feel the problems and the pinch.
Britain's second biggest airport, Gatwick, is worried about how travelers will cope. Shortly before going on air, I spoke to the head of Gatwick Security, Geoff Williams, and needed to know how bad it could get.
(BEGIN AUDIO CLIP)
GEOFF WILLIAMS, GATWICK AIRPORT SECURITY: Well, we certainly recognize it's going to be a challenging time. And we are planning for the worst. But obviously we are putting a lot of contingency measures in to try and ease any pressure for our passengers who are arriving at Gatwick.
QUEST: What's going to be the biggest problem, just queues and lines building up in the immigration halls, and people just not being able to get off aircraft because of stands being full?
WILLIAMS: Yes, I think that's -- excuse me -- that's basically it. We are planning to operate as near normal service as we can. So outbound aircraft need to get away as well.
But inbound aircraft, if there are queues at the immigration, at the border area, then we will put plans in place to try and ease any overcrowding, provide facilities for passengers, et cetera, to try and make it as pleasant as possible in the circumstances. But we think it may be quite a challenging day.
QUEST: You see, give us an idea, because obviously in previous disputes that management have stepped in, or there have been middle management that can be brought in. But that can't happen here, can it?
WILLIAMS: Well, what we've heard from the borders' agencies, that they are looking to put plans in place, to have some stuff there, to try and operate the border as best they can, and equally are all the other agencies are as well. The air court staff we're turning out hundreds of volunteers to help as well, and the airlines are doing what they can as well.
QUEST: I know the perennial answer in these situations is check with your airlines before travel. I know all that. But I suppose your fundamental point would be if you don't have to fly to London Gatwick on Wednesday, don't bother.
WILLIAMS: Well, I am going to give you that message, just to check with the airline, because some of them can do different things around maybe booking on slightly before or slightly after the key day. But they have to be business decisions the airlines take. And it is a good time to check on their website, just to make sure what's happening.
QUEST: But you are doing the best in your preparations that you can.
WILLIAMS: Absolutely. We'll have lots of extra staff of volunteers and try and make that as least amount of inconvenience we can to our passengers.
(END AUDIO CLIP)
QUEST: That, of course, is the security head of Gatwick Airport. And you can be assured next week we will have full coverage as when this incident happens.
In a moment, Thanksgiving in the United States is over. And when the going gets tough, the tough go shopping. Black Friday has begun.
QUEST: It's Black Friday, the busiest day of the year for U.S. retailers. And if all goes according to plan, it's going to be a bumper year. Many stores have pushed their openings back into Thanksgiving Day itself. The hope was to steal a march on their arrivals. After all, he who gets the money first wins the game.
A CNN poll shows that a quarter of all Americans were due to brave the queues and the crowds in order to bag the bargains. Last year, Americans spent more than $19 billion on Black Friday alone, and they're predicting this year it will break into $20 billion.
So what sort of bargains are we talking about? What is actually up for grabs at the moment? If you join me over at the super screen, I'll show you exactly what we are talking about.
Let's start with one of America's biggest retailers, Walmart. Walmart is -- has this massive sale on at the moment. Black Friday specials, this is the U.S. version, and as you can see, bundles of gifts. They were offering these Sony and Blu-Ray players for $799, a saving of $400. Or at least you would have got these sort of savings.
Actually, you could have got them except a lot -- and you can see the size and the savings. But a lot of them have been sold out. Over to Macy's, where they have got sales and savings of 25 to 65 percent.
Now, remember, the sales have only just actually got underway. I mean, this is even the beginning of the process before they actually go any further. If you want one particular saving, diamond earrings. These diamond earrings were a bargain.
This is the international site. It's -- it knows I'm in the U.K. So Macy's is determined to offer me the price in Britain. As you can see, this particular price is -- that it's offering is a sale price, of course, on the diamond earrings. Maybe Maggie Lake would like something along those lines.
And, finally, everybody's in on the act. Even President Obama is having a Thanksgiving sale. His 2012 election campaign, if we go to the bottom, you will see Thanksgiving. And there is an election campaign take -- sale taking place at the moment. Ten percent off or more. It's called Turkey 10% sale.
Look at all these things you can get, all on sale. If you -- that's, of course, if you so wish to reelect President Obama.
Now some Toys "R" Us stores in the U.S. have been trading for 17 hours straight, and it's only just after noon on the East Coast. West Coast has a long way to go. The chain flung open its doors to bargain hunters at 9:00 pm on Thursday. Maggie Lake has been following events, and clearly getting on top of the bargains.
MAGGIE LAKE, CNN REPORTER: So, Jerry, talk to me a little bit about what you're expecting for the holiday season.
GERALD STORCH, CEO, TOYS "R" US: Well, one thing that we've learned is that Christmas always comes. So we expect parents to be very excited about buying that great holiday gift for their kids. And they've done -- do that every year, and they'll do that this year as well.
So, you know, I'm not an economist. I know that times are very difficult in general in the economy. But what we see is that the last thing parents cut back on was the Christmas present for their child.
UNIDENTIFIED FEMALE: Next in line.
LAKE: Well, what do you think the state of consumer is? What are they thinking right now?
STORCH: Well, they will buy. But they want to make sure they're getting a great deal. And so we focus very heavy in Toys "R" Us at making sure that we have fantastic, amazing deals throughout the holiday season.
And on top of that, we're offering our consumers who join our loyalty program the chance to get 10 percent back on everything they spend this holiday, to get that back after the holiday. And that's an incredible offer. And we think that's going to drive a lot of consumer behavior, too.
LAKE: We have some of the toys that are going to be hot here. What do you think is going to be the best seller? What are you guys focusing on this year?
STORCH: Well, the hottest toy is actually Air Swimmers eXtreme. It's a giant inflatable shark, and you can also get a clownfish version.
This LeapPad is the hottest electronic toy for kids. It has a heavy learning component to it, so it helps your child learn how to read, learn their geography, learn math, which we all like.
(BEGIN VIDEO CLIP)
LAKE (voice-over): There was a time in the 1980s when Toys "R" Us was the premier toy store in the U.S. But competition from mass discounters like Walmart and the rise of online shopping almost drove the company out of business. Jerry Storch, a retail veteran, was brought in to turn the company around.
(END VIDEO CLIP)
LAKE: How are you competing with the likes of Walmart, which discounts heavily? You've got Target out there. You have -- in online space, Amazon's so huge. What sets Toys "R" Us apart?
STORCH: Well, totally focused on toys. We have more toys than anyone at any price point. We have buyers who are trained in toys, who spend their entire career working with toys. And we work very hard to make sure that we have the hottest products in stock all the way to Christmas.
So when you get to a product like this, which is an Uglydoll, a doll, the, you know, you can't get this at the limiter (ph) store and mass merchants, at the discount chain.
LAKE: You're talking about expanding in Asia. How key is that to continue the momentum and to try to sort of rebuild Toys "R" Us?
STORCH: We operate now in 36 jurisdictions, outside of the U.S. We most recently repurchased our properties throughout Asia. And so we're opening stores up all over Southeast Asia, in Singapore, Hong Kong, Malaysia.
STORCH: . Thailand. Toys "R" Us stores, you would recognize that if you went there. (Inaudible).
(END VIDEO CLIP)
QUEST: Toys "R" Us, Walmart, all the big stores. I'm joined now from Macy's in New York by CNN's Chris Knowles.
Chris, we've already seen the sort of bargains that people are being attracted by. And are people walking out with sizable bargains?
CHRIS KNOWLES, CNN REPORTER: I think so, Richard. It's been a big day here, an early day. For the first time ever this Macy's opened at midnight, thousands of people crowding into the store at midnight in search of those bargains.
They hit the store at midnight 10,000 strong, some of the best bargains, we're told, being found in the women's shoe department, also fragrances. If you are a fan of the smell-good stuff, plenty of that. If you spend $65 American on a bottle of perfume, well, you got a free digital camcorder.
So that was something special that was offered, and also some stuff for the younger girls, the Justin Bieber. Bieber fever hit hard. They got a free CD along with their purchase. Now we have shoppers that are joining us now. They've been shopping here all day. We're going to talk to Amy White.
AMY WHITE, SHOPPER: Hello.
KNOWLES: Amy, you're from the great state of Ohio. Have you found good bargains here today at Macy's and all around New York?
WHITE: Yes. Very good. We've got lots of good bargains.
KNOWLES: What have you been seeing that you bought for yourself, family?
WHITE: Just for family, clothes for myself, just fun stuff.
KNOWLES: Now tell me, it's -- I know what it's like inside Macy's right now. It's more than a little crowded. But was it worth it, do you think?
WHITE: Yes, it was first time -- well, since I was in high school, since I've been to Macy's in New York. And it's a lot of fun just to see all the decorations and to see all the people and just to be in Macy's and New York and the day after Thanksgiving.
KNOWLES: (Inaudible), I mean, this is the flagship store of the Macy's chain, also the largest one in the world. In terms of numbers, we expect 152 million people to participate in Black Friday shopping. That's the estimate from the National Retail Association. We'll see how their numbers match up at the end of the weekend, we count all the coin.
QUEST: All right. But how much has Amy spent today? That's what we need to know. And what's she been spending it on?
KNOWLES: How much, Amy?
WHITE: So far about $30. But I'm just getting started.
KNOWLES: You got a late start today. What do you think you're going to end up doing?
WHITE: Oh, probably no more than $100, trying to, you know, keep it in budget this year.
QUEST: And ask Amy -- ask Amy quickly, finally, how much does she expect to spend this Christmas?
KNOWLES: This Christmas as a whole, what would you say?
WHITE: This Christmas, probably, hopefully around $200, $250. I don't have a large -- super large family to buy for. So I try to keep it more about the spirit of the season, you know, giving to others and Christ first (ph). So that's kind of my focus.
KNOWLES: All right. Well, we wish you a very happy holiday.
And, Richard, quickly, we can see some of the anti-fur protesters. They've joined us here at the Macy's as well.
QUEST: All right, Chris. Many thanks indeed. We're still having a rather splendid sweater that you're wearing tonight -- today. We wondered whether that was one of your early Christmas presents that you have this.
KNOWLES: Indeed (inaudible).
KNOWLES: Yes. That (inaudible) is a thank-you for my wife for the sweater.
QUEST: Excellent. Send -- tell her to get me one as well for next - - for New Year. Many thanks, Chris, joining us in New York.
We normally have "Tweets from the Top;" tonight we have "Tweets from the Till." These are some of the tweets that are out and about that people are sending. So here we go, first one, ring the cash register.
"Is Black Friday even a thing anymore? Hello, online shopping. People are nuts. Walmart at 5:00 am?"
More "Tweets from the Till."
"Nothing but a long, hot shower after eight hours of shopping, getting pushed and shoved, waiting in line and having the best first Black Friday."
It's there somewhere.
"I ended up not getting any PS3. They were sold out at all stores due to this Black Friday post-Thanksgiving sale."
And a final "Tweet from the Top," this is classic. This says, "For those wondering, my Black Friday deal of the day was Hungarian bonds. No waiting in line. What a steal."
That is a reference, of course, that Hungarian bonds have been downgraded to junk status. The Hungarian finance minister says that they will cooperate with the IMF and hoping to get some form of priority credit line. Back after the break.
QUEST: Hello, I'm Richard Quest.
More QUEST MEANS BUSINESS in a moment.
This is CNN. And on this network, of course, the news comes first.
It's now about 9:30 and Friday evening in Cairo and a day of huge protest is slowly settling down. Demonstrators have jammed Tahrir Square. They're demanding Egypt's military council resign in favor of a civilian government. The White House today backed that demand.
Across the city, thousands came out in support of the military and to demand an end to the Tahrir Square protests.
Arab League ministers are set to meet on Sunday to discuss possible sanctions after Syria may have failed to respond to an ultimatum for an observer mission. Activities say 26 more people were killed in Syria as protests continued on Friday, including a child. A U.N. committee said it has received reports of massive human rights violations in Syria since the anti-regime demonstrations began.
If your travel plans will bring you to London next week, particularly Heathrow, or any of the major airports, you can expect to be seriously inconvenienced. Public sector unions are planning a mass strike that day. The operator of Heathrow and other airports, BIA, says arriving passengers could see delays of up to 12 hours. Departing passengers could see mass cancellations because arriving passengers may not even be allowed off the aircraft.
Holiday shopping is in full swing in the United States. Stores opened earlier than they have in the past. It's a backfired. Retailers are increasingly competitive for the business. The manager of one mall says the crowds are larger and younger this year.
Three people have been killed in multiple attacks in Eastern Kenya near the border with Somalia that you, of course, are aware of. Two died in what's reported to have been a grenade attack in the town of Garissa. A Kenyan soldier was killed in a bomb attack in the same area.
They are the latest in a series of incidents that's being blamed on militant and criminal groups that come across the border from neighboring Somalia.
Now, so far, we've known what's happening. But the groups, in recent months, have brought kidnapping and killing to the luxury resort of Lamu. And that, of course, is right at the heart of Kenya's tourism industry.
Until recently, it was a major tourist top destination.
Our correspondent, David McKenzie, now discovers when you talk about Lamu, it's too quiet for comfort.
DAVID MCKENZIE, CNN CORRESPONDENT (voice-over): Lamu, Kenya -- it's a playground for royalty, magnates and movie stars, to many, an African paradise.
(on camera): Perfect beaches, wonderful weather. As a tourist, what's not to love?
But in September, Somali gunmen captured a British tourist just up the coast. Then just two weeks later, they took a French resident from this hut right here. The net result is that it's decimated Lamu's tourism.
(voice-over): Monika Fauth came 14 years ago as a backpacker and never left.
MONIKA FAUTH, OWNER, BANANA HOUSE: I think people really look to -- for -- for peace and calmness.
MCKENZIE: Everyone canceled after the kidnappings and soon it could be down to tough choices.
FAUTH: I am OK, but what about my -- my staff?
What about their children and their -- and their families?
We really need tourists to come.
MCKENZIE (on camera): Without them, the whole island is affected.
SALIM: Everybody is connected to tourism here, the fishermen, the shops, the hotels, the houses, the daus (ph), all.
MCKENZIE: Salim is now forced to sell to local buyers for a third of the price. Only Lamu's famous cats, it seems, get their fill.
A world heritage site, Lamu is one of Kenya's tourism jewels and security has been stepped up. Patrols head out to sea every night to block entry points to the island. But most foreign governments are still telling people to stay away and hoteliers are angry.
FAUTH: When we had a bomb blast in London, when we had problems in Spain, when we had the Twin Towers blown up in New York, was there a travel ban?
There wasn't. So why a travel ban to Lamu?
MCKENZIE: With the bans in place, the daus (ph) are beached and an entire community focused on tourism is waiting for visitors who just don't seem to come.
David McKenzie, CNN, Lamu, Kenya.
(END VIDEO TAPE)
QUEST: In a moment, fearing for their businesses, small retailers in India are worried their livelihoods are about to be swallowed up by big supermarkets. It's a Black Friday of a different type, in a moment tonight.
QUEST: India says it will allow overseas companies to run supermarkets, changing a longstanding policy of keeping foreign players out of the market. Chains like Walmart from the U.S. and the British group, Tesco, are thought to be eyeing up a slice of a very big pie. It's a retail sector seriously worth $450 billion a year. The government has passed the law on Thursday. It's taken years of intense lobbying by international retail companies.
As Mallika Kapur reports, when these companies move in, local players say their livelihoods will be under threat.
MALLIKA KAPUR, CNN INTERNATIONAL CORRESPONDENT (voice-over): Chetan Patel owns a convenience store in the heart of Mumbai. It stocks food, toiletries, cleaning supplies -- the kind of goods you'd find at Walmart.
Business is pretty good, he says. No surprise, then, that the world's largest retailer wants to open stores in India, the world's second most populous nation.
MIKE DUKE, PRESIDENT & CEO, WALMART: We see the opportunity because of the -- the Indian population, the rising aspirations of millions of -- of Indian consumers that want to live a better life.
KAPUR: Foreign retailers have finally got their way, pushing ahead with the dramatic reform, India will allow foreign multi-brand retailers to enter the domestic market. Until now, they could only establish wholesale joint ventures.
Analysts say opening up retail would ease massive supply bottlenecks and control food inflation. It's estimated that around 30 percent of India's farm produces spoils before it reaches consumers.
SALONI NANGAI, MARKET ANALYST: When we look at food retail, there can be a number of benefits that can come in by the investment in bank and infrastructure, strengthening that, helping farmers with better prices, with better yield products, as well as controlling prices at the consumer end.
KAPUR: But not everyone is convinced of the benefits.
India's retail sector is made up of millions of tiny but really well stocked local neighborhood stores like this one, who feel they will be wiped out if big retailers come in.
"We won't be able to compete with large chains," says Patel. "We'll all be jobless."
The Indian government thinks differently. It's confident there's room for everyone and that the small shops and the big giants can exist side by side.
Mallika Kapur, CNN, Mumbai.
(END VIDEO TAPE)
QUEST: A lot of retailing on tonight's program.
A wintry scene on the Scottish hills this weekend. The season's heaviest snow is falling, not the first of the season, but it could well be the worst.
Pedram is at the World Weather Center with that.
PEDRAM JAVAHERI, CNN METEOROLOGIST: Yes, Richard, we're looking at very heavy snowfall, as you said there, and very gusty conditions, as well. Actually, the U.K. Met Office issuing warnings for the Scottish hills, work your way to the higher elevations and out toward, say, the M-74 or the A1 even north of England there. Some concerns for major crosswinds and winds upwards of -- get this -- 130 kilometers per hour associated with these storms.
So, yes, it's winter weather radar, the pink, and also the white, finally showing some snowfall in the past 12 hours.
And, again, the ski resorts out there saying the snowfall -- and I believe it's the Nevis Ski Resort across the northern Scottish hills there, saying snowfalls down to 450 meters associated with this storm system.
This storm begins to exit the picture. And in the past 24 hours we're talking about mild air that had moved in across portions of Glasgow. Well, that story is coming on now. And take a look -- the next storm system comes in. The temperatures are going to finally warm, we think, on Sunday.
But again, the current reading out of Glasgow sitting at six degrees. This time yesterday, the current observation was at around 12 degrees. It was even warmed in Glasgow than it was in Madrid.
But conditions right now looking to be a far different story there. We're looking at eight degrees right now in Paris. But if you factor in some of those strong wind gusts coming in with the storm system, the wind chill down to a goose England. It's zero right now out of Glasgow with the strong winds in place there. So keep that in mind. It's certainly going to cause a few problems with property out there and also driving as this storm exits the picture and the next warmer storm enters the picture, come Monday into Tuesday.
But this pattern, again, going to continue for really unsettled regions there across the northern regions of the U.K. and Ireland on into Scandinavia will call for more snow and rainy showers in the forecast.
While Southern Europe remains dry. There has been concerns here with those ski resorts. We -- we talked about the ski resorts across the U.K. opening up, but snow coming down to lower elevations.
But down south, across the areas within the Alps, we have concerns that some of those ski resorts not opening up, not entirely, at least, not until the latter portion of December, as the forecast calls it. Certainly that's the story there.
But Down Under we go. I want to talk to you about some fires that have been active across portions of Western Australia, just outside of Perth. And these are all the thermal signatures associated with all the fires.
Now, this is actually a prescribed burn that was in place there, Richard, in the Martyr River region of Australia. Unfortunately, winds blew in through the area as the prescribed burn was taking place. That caused property damage to some 30 plus buildings, some of which were historic buildings out there.
But right now, the forecast looks to be improving, with the winds dying down and the conditions improving in Australia, as well -- Richard, that's the latest here from the Weather Center.
QUEST: Why don't we take a look at the moment -- we're at that point in the year, Pedram, where things could start to get extremely unpleasant for those of us in Europe. I mean certainly...
JAVAHERI: Well put.
QUEST: Well, we've had a bit of -- we've had a bit of fog and we've got a bit of snow.
And my question to you is this, how bad or good is long-range weather forecasting for the rest of the month?
JAVAHERI: For the rest of the month -- I'm guessing you're also referring to going on into December.
JAVAHERI: It looks like it's going to be unsettled. As you said, it's that transitional period right now. And, you know, in less than a month, we're talking about switching on into the winter season.
So that jet stream that I showed you with the storm pattern that was across the Northern U.K., that is going to gradually begin shifting south. And as that shifts south, the storm systems begin not only moving through London, but also working their way in places they need the rain...
JAVAHERI: -- and snow, which is in Southern Europe, as well.
QUEST: And I guess you're not going to take a bet from me yet on a white Christmas. It's still a bit too far out -- Pedram...
JAVAHERI: Well, certainly.
QUEST: -- many thanks, indeed.
As we've been hearing, shoppers are descending on the stores and malls across the United States. And the race is to get a bargain in full swing. It's still morning in the US. Shopkeepers are calling it Black Friday. Shops have been open since late on Thursday night.
The scramble to spend has passed mainly without incident.
But look at a Walmart store in Los Angeles, where a woman used pepper spray to clear shoppers out of her path.
Now, it would -- it's -- it's a serious matter. Industry analysts reckon more than 150 million Americans will spend over the stores this weekend. That's up 10 percent on last year's estimate. According to a the poll conducted by CNN and outreach, nearly one in four Americans plan to head to the shops this Friday.
(BEGIN VIDEO CLIP)
TERRY LUNDGREN, CEO, MACY'S INC.: We tested 12 stores, at the request of those stores, last year. And it was a big success right from the gun at midnight. And so it was clearly a big success here at Herald Square with over 10,000 people standing outside waiting to get in.
(END VIDEO CLIP)
QUEST: And the moral of the tale, if you're buying me a present, start shopping now.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
I hope it's a good weekend for you.
Thank you for joining us this week. I'm grateful to have you with us.
I do hope it's profitable.
"MARKETPLACE AFRICA" is next.
ROBYN CURNOW, HOST: You're watching MARKETPLACE AFRICA.
I'm Robyn Curnow.
Over there is Port St. John's. Behind me in that direction is Umtata. Over there is Lusikisiki. Small towns in the Eastern Cape Region of South Africa.
And it's in areas like this that have some of the highest rates of HIV and AIDS in the world.
Every day in South Africa, thousands of people die of HIV-AIDS related deaths. And with the tragedy of death comes the business of funerals and burials. The cost of dying can impact on the lives of the living for many years afterwards, even more so if you're a Zimbabwean living in South Africa.
CURNOW (voice-over): A wife collapses at her husband's funeral, overwhelmed with sorrow and burdened with worry about how she'll support herself and the children. The costs of the funeral are shared by the family but still difficult to bear.
JUDGE NCUBE, MORTICIAN:
It is expensive because we have to donate -- each and every member of the family has to donate (INAUDIBLE) manage to take him home.
CURNOW: To take him home, back to Zimbabwe. There are millions of Zimbabweans living in South Africa, escaping the economic and political hardships, looking for a better life.
(on camera): So this is one of the cold rooms.
How many bodies are in there now?
CURNOW (voice-over): A life that all too often ends in an early death in a country not called home. Dressed for death by a man called Judge.
(on camera): So you -- so you bring the body out?
CURNOW: And you just clean it.
NCUBE: I clean it and...
CURNOW: Dress -- and dress it in a...
CURNOW: And you're a Zimbabwean. Most of the bodies that end up here are Zimbabwean, as well.
NCUBE: Yes. Most of them.
CURNOW: Located on a street corner in Johannesburg's inner city, this funeral parlor is called Kings and Queens because they say they offer royal services even to the poorest of Zimbabweans.
(on camera): So this is one of your trailers which you
REUBEN NARAN, KINGS & QUEENS FUNERAL SERVICES: Yes, it's -- it's one of our trailers.
CURNOW (voice-over): Reverend Naran says this funeral parlor was started eight years ago to help fellow Zimbabweans bury their dead back home. Without being charged exorbitant prices by unscrupulous funeral operators doing business in a chaotic and often unregulated industry.
NARAN: The cheapest package will be $1,000. That includes the coffin and a four seater, which is the car which takes four members of the family and the deceased in a trailer back home. And after the funeral, it will bring back the family to Johannesburg, South Africa.
CURNOW: In Southern Africa, respect for one's ancestors and a cultural need to bury loved ones in family graves on community land means that burying the dead at home involves long journeys to rural areas, often at great expense, which is particularly difficult for the poor.
Even though many people save up for their own funeral, paying monthly installments, that often isn't even enough.
(on camera): Do you get a sense that -- that this has become a terrible burden on families?
NARAN: It does. It has because it costs. So you go and borrow money. You have to pay back, repay the money after the funeral. So it means your life will be affected, most probably for the whole year for a single day.
CURNOW: Death is all too familiar here. The South African rates of HIV-AIDS, of murder, of road accidents, are some of the highest in the world. So the journey from here up north to Zimbabwe is a regular one. Coffins laid in trailers, wrapped in white lace, accompanied by a group of family and friends who make the 14 hour journey across the border. There is the emotional toll, the financial cost. They bear it all as they take one of their own back home.
(END VIDEO TAPE)
CURNOW: So let's take a look at some more numbers.
The organization, Statistics South Africa, says that 650,000 people died in South Africa last year. And with funerals costing anywhere from $100 to $25,000, the industry as a whole is worth about $7 billion.
Next up, insuring the big send-off -- how funeral policies are helping even the poorest Africans plan ahead for the end.
CURNOW: There's a saying in these parts that the richest man in the village or the town is often the funeral director, because he's guaranteed work.
Funerals are lucrative because here in Africa, the bigger the funeral, the better. And this has created a huge demand for funeral and burial policies.
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: One of the reasons insurance, both short-term, and particularly long-term insurance, is growing overall on the continent is this kind of explosion of the middle class in Africa.
Is this a phenomenon that people have not taken seriously up until recently?
ABEL MUNDA, MANAGING DIRECTOR, CFC LIFE: It has really never been there in the past as such. It is recent phenomenon, just like you reckon. And now, for example, in Kenya, we really have a booming middle class. And it's always said that it is the middle class that drives the economy.
MCKENZIE: There is a growing middle class. It's reached more than 300 million in Africa by some counts. But still, selling life insurance must be a particular challenge.
Why do you tell them they should buy your products?
MUNDA: When you are young and, you know, particularly just out of school, life insurance is the farthest thing in your mind.
But one thing that we must realize is if you start -- because most of our products have a savings element. You know, there's both the mortality risk and there is the savings part of it.
And the thing is when you buy life insurance when young, it is a lot cheaper for you and it guarantees you a future. Sometimes I know it's a difficult selling proposition when you don't even have a family. But the earlier you start, the better.
MCKENZIE: What is the Kenyan attitude to -- to money and death?
Do people plan for the future?
MUNDA: You know, a big segment of the population still isn't (INAUDIBLE) that's not planned. And there was certain times when talking about one's death was actually a taboo. So when you go to sell someone insurance and you start talking about death, they don't even want to hear about that.
So one of the things we tell our agents when they go to sell is to talk about the benefits and securing the future of their independence. When you talk about the independence, people are normally very emotionally connected to their children and their children's future. And so they do not want them to suffer when they should pass on, when something should happen to them.
And this is the essence of life karma. So that is -- that is how we talk about it.
But otherwise, culturally, you know, talking about death has always been, you know, a taboo. And most people in Kenya, we also discovered, like, for example, to enjoy the benefits of their insurance while they are still living. So we came up with this endowment product that can pay you something while you are still living, because sometimes people say, well, once I'm gone, you know, you guys will have to worry about my funeral expenses and all that.
I think we're -- as we are going into the future, people are becoming a lot more literate, a lot more responsible and wanting to take care of their future. And so therein lies the market for life companies.
And life companies will continue to grow and have grown, it's been demonstrated in the past, the recent past, for example in Kenya, that life companies are growing at a faster rate than short-term companies and, in fact, in Africa in general.
MCKENZIE: One of the -- the challenges you might face is the level of trust that Kenyan might have in insurance companies. There are some 40 insurance players in the Kenyan market and the market is relatively small...
MCKENZIE: -- by, you know, corporate standards.
Why is that a challenge for life insurance?
MUNDA: Well, it's a -- it's a challenge, first of all, because of the image. The image has not been very good. You know, most of the life insurance companies use agents to sell. And one of the things is that the image for the agents, that model, has not been very good. So that tends to drive away potential clients from us.
So as an industry, we have our work cut out for us in that (INAUDIBLE).
MCKENZIE: With so many players, presumably, there is the risk of some of the smaller ones defaulting on people's -- on people's insurance.
MUNDA: You are very right that there are small players who may -- may be on shaky ground. And so to protect the industry going forward for better growth and what have you, we must see consolidation. Otherwise, the 40 something insurance companies that are currently in -- in -- playing in the space, there are -- certainly, there are risks that some may not be strong enough.
MCKENZIE: What benefit could the growth of long-term insurance have for the Kenyan economy overall?
MUNDA: As a life company, we are really mobilizers of savings, you know. And where we put some of these savings is into, for example, the government papers. So we finance infrastructure projects. When you look at, for example, recently the government of Kenya has been issuing infrastructure bonds. Well, insurance, particularly life insurance companies, are a major player in that.
So for a country to develop, you need a strong and vibrant life sector because the life sector does mobilize savings. Those savings can then be channeled into very good infrastructure projects for the country to help the country grow.
(END VIDEO TAPE)
CURNOW: Well, do join the discussion on our Facebook page -- are African funerals just too expensive, too much of a burden on the living?
Well, that's all for me, Robyn Curnow, here in the hills of the Eastern Cape.
Don't forget, we're online at CNN.com/marketplaceafrica. All of our stories and interviews are there.
But until next week, goodbye.