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QUEST MEANS BUSINESS
European Stocks Tumble; Sarkozy Election Struggle; French Presidential Elections and the Economy; Dutch Government Collapses; Interview With Former Iceland PM Found Guilty of Negligence; US Dollar Gains; Future Cities: Vancouver's Homeless Solutions
Aired April 23, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, HOST: A stock shock. Political turmoil pulls the markets lower.
The Dutch prime minister resigns after austerity measures cause the collapse of his government.
And Iceland's former prime minister tells me that he's being made a scapegoat for the financial crisis.
(BEGIN VIDEO CLIP)
GEIR HAARDE, FORMER PRIME MINISTER OF ICELAND: And I have just followed the tradition of all my predecessors as leaders of the Icelandic cabinet have practiced throughout the decades. And maybe I'm just taking a hit for all of them.
(END VIDEO CLIP)
DOS SANTOS: I'm Nina Dos Santos in for Richard Quest, and this is QUEST MEANS BUSINESS.
Good evening. Tonight in shades of red, we see European stock markets painting a pretty difficult picture for this continent, one of a continent in trouble. Every single one of the block's main indices has actually started the week with some pretty heavy losses. Take a look at that. A lot of them down to the tune of 2 to 3 percent.
The first round of the French elections, it seems, has spooked many an investor, as a strong showing for the far right muddies the waters for the two remaining candidates that go onto the runoff on May the 6th.
The DAX in particular, as you can see, is sinking to a new low. That one putting on a decline of 3.5 percent on the day. This was largely on the back of data showing that Germany's manufacturing sector is rapidly contracting. Not a good sign, considering that was one of the most robust eurozone economies.
In Spain, what we saw was a 0.4 percent in first quarter GDP for that country, officially putting it into a technical recession. And debt is creeping yet again into the spotlight as the budget deficit in the Netherlands becomes the latest wrecking ball for a coalition government over there.
We start, though, in France, where Nicolas Sarkozy needs and historic turnaround to keep his job as president. Mr. Sarkozy was back on the campaign trail yet again today after the first round of these presidential elections put him just behind Francois Hollande. This is the first time that a sitting French president has come second at this stage of the vote.
Mr. Sarkozy has said that they had, quote, "a duty to listen to to far-right voters," who may now hold the key to his political future. Hala Gorani si in Paris standing by to tell us all. Hala, though, presumably all the kind of horse trading has begun.
HALA GORANI, CNN INTERNATIONSL CORRESPONEDT: It has begun, and the big question is, of course, the strategy for the UNP camp, the incumbent president, Nicolas Sarkozy, how will he modify his discourse, his political discourse, in order to seduce those voters on the right wing fringes of the political spectrum, namely, the National Front voters.
Eighteen percent of them went for Marine Le Pen in yesterday's election in the first round, so he's really going to have to make an effort, and it will be an uphill battle for them in order to try to get as many of those voters as possible.
Because in the first poll published right after the first round, Francois Hollande, his socialist challenger, was still way ahead at around 55 percent, 45 percent for Nicolas Sarkozy.
Well, let's talk about one of the big, big issues that any president in a couple of weeks, whoever it is, whether it's Nicolas Sarkozy or Francois Hollande will have to deal with, and that is the debt crisis in this part of the world that is threatening the euro, it is threatening the eurozone, and certainly countries that have very high debt levels, such as Greece, Portugal, and Spain.
Thierry Breton is a former finance minister here in France, and he had some very definite ideas as to what needs to be done. You're a fan of austerity, aren't you?
THIERRY BRETON, CHAIRMAN AND CEO, ATOS: Well, when I was in the government, you're right. I would use the debt of the country, because I was thinking that it was absolutely mandatory to go back to normally. And it's true that since then, we are seeing -- we have seen going to the other direction.
But the good news, I should say, there is good news. The good news is that both candidates, Sarkozy and Hollande, have said the same thing, mainly that this year, we will be at minus 4.4 percent deficit, and next year we will be at minus 3 percent. It is the first time in our recent political history that both candidates have mainly the same objective.
GORANI: Well, let me tell you this, though, about Francois Hollande, and this is what international viewers are interested in. There are some differences. Francois Hollande is, perhaps, for reining in the debt as you say. But then, he's also for not completely choking off growth. When you do that, when you cut, cut, cut, cut cut, what happens?
BRETON: It's absolutely true that we need to preserve the growth capacity of Europe. We'll not be able to solve the problem only by cutting. And this is what Francois Hollande said. And by the way, this is also what Nicolas Sarkozy said again one week ago.
BRETON: So, I think that now our two candidates are lying. They said that probably we need to reintroduce some growth strategy.
GORANI: But is -- yes, what is the growth strategy?
BRETON: Well --
GORANI: Because right now, if all you do is cut government spending in order to fall in line with what you need to fall in line with in order to say in the eurozone and keep a healthy common currency, you're not going to see growth rebound in this region the way you need it to to cut unemployment.
BRETON: There is one way to do it. First, we will have to do the reforms. One way or the other, to go back to minus 4.4 and minus 3 percent deficit next year. We will have to do the reforms. And it will be painful, and it will be difficult. But this will have to be done.
Secondly, how to introduce growth while giving us some more time. I think that it is probably dangerous -- both candidates, Sarkozy said that he was committed to go back to balanced budget by 0-16, and Hollande said by 0-17.
I think that for both of them, we should probably be a little bit less excessive and probably to say that we should commit to go back at 17 or 18, which will give us the room to add some growth strategy.
GORANI: Well, let me be the voice of the voter, here. And the voters have spoken to me, they say, you know what? Time -- we've given these politicians time. Enough is enough! The unemployment rate is going up. I don't know if I can send my children to school. I don't know if my purchasing power will continue to crumble. Enough! Find a solution already.
BRETON: And that's why we need the solution is definitely, even if we have to find jobs for our kids. Even if we have to do what you said, we have to reduce the spending of this debt today. The French government is spending 56 percent, 56 percent of the GDP just to spend public spending.
BRETON: This is the highest rate ever. We have to reduce this. And guess what? We will do it.
GORANI: So, when you talk about reforms, what do you mean?
BRETON: You mean -- unemployment reforms?
BRETON: You mean to do what the state is doing --
GORANI: Like an Anglo-Saxon model in France?
BRETON: Absolutely. We will --
GORANI: But that doesn't work here.
BRETON: But it will have to work. That's why we need more time.
BRETON: But you know, what was interesting today, when you look at the market, we had a bad market day today mainly because of the PMI index. All the stocks in Europe were down. But what is interesting, the bond market didn't move at all today in France.
BRETON: It means that probably the bond holders anticipate that for the time being, Sarkozy or Hollande will do probably the same thing. Now, the true question will be, is the next Assembly after the general election, it will be interesting to see what will be the program. And this is where we will have a meeting, a rendez-vous, with moment of truth.
GORANI: So, who would you like to see -- who's the best president for France in two weeks?
BRETON: I will not comment on this because you know what? They both have the same objective, which is important for France.
GORANI: All right, Thierry Breton, the former finance minister, thanks very much, there. Not revealing his choice, although I have -- well, maybe you'll try to figure out at home or wherever you're watching what you think his choice might be. Thanks very much for joining us.
And Nina, there you have the view from Paris on what needs to be done in order to try to solve this debt crisis that is such a huge issue in this part of the world and in many other parts of the world. Back to you for now.
DOS SANTOS: It is, indeed, great debate there with Thierry Breton, Halo Gorani. Many thanks for that from Paris.
Now, austerity may also claim the scalp of another government in another eurozone nation this evening. The Netherlands will be heading to the polls, it seems, sooner than expected because today the prime minister, Mark Rutte and his cabinet resigned after losing the support of a vital coalition ally.
Over the course of the weekend, the far-right Party for Freedom refused to back spending cuts worth about $20 billion. These cuts are needed to trim the Netherlands' runaway budget deficit. That budget deficit is expected to top 4.6 percent this year, that's way above the 3 percent ceiling for EU rules.
Queen Beatrix of the Netherlands has now asked lawmakers to continue to work in the interest of her Kingdom. Elections for a new government could come as soon as June. Jaap Jensen is the political editor for the Dutch current affairs TV show, Pauw and Witteman, and he joins us now, live from Amsterdam via Skype.
Jaap, thanks for coming on the show. It's good to have your perspective, here. First of all, what I want to ask is, is austerity that unpopular in the Netherlands, or is this just a case of political maneuvering?
JAAP JANSEN, POLITICAL EDITORY, PAUW & WITTEMAN: Well, the Netherlands is one of the countries that was very harsh to other countries to say you have to take austerity measures. But now, at this moment, we have to take them ourselves, and now we are reluctant. And mainly the Freedom Party of Geert Wilders didn't want to cross that bridge at the end of the route.
DOS SANTOS: So, do people back Geert Wilders? What do you think?
JANSEN: Well, he says, "I cannot do this for all those pensioners who have to bleed financially. I cannot take it from my responsibility. So, on Saturday, he said, "I don't take this anymore," and today, there was only one conclusion possible for the prime minister to go to the queen and to resign.
DOS SANTOS: How serious is this? Because we have had this in past going on for several meetings already. We knew that it was just going to be very, very difficult for Mark Rutte to get these austerity plans through.
Is it -- is this a surprise for people across the Netherlands at all? So, people like you, are you worried that we're now going to see Holland losing its coveted Triple-A credit rating?
JANSEN: That's a very big problem, and when we lose the Triple-A rating, the rent will get up, and then, we have to face some 4 or 5 million -- billion extra every year. We had to -- because in the future, that's no solution.
And there's a problem, also, in Parliament, because at this very moment, there is no majority to comply with the rules from Brussels to go the three percent deficit next year already. Some of our main parties say we can wait a few years.
DOS SANTOS: So, what's going to happen from here? If we do get these snap elections triggered as of June, will Rutte get in again in his party?
JANSEN: Well -- it's not sure there will be elections at the end of June. Maybe they are in September or even October because it's a bit half- half in Parliament, and they will decide it's -- I think tomorrow.
I think Mark Rutte is the main candidate for the next government to lead. Maybe he will lead another coalition with other parties, a more left-wing coalition. And that's very interesting, because the coalition so far was a full-fledged right-wing coalition.
DOS SANTOS: OK, Jaap Jansen, joining us there via Skype live from Amsterdam. Great to have you on the show. Thanks very much for coming on this evening.
Now, earnings season is in full throttle and, judging by some of the kind of results that we've seen, we've gotten off to a smashing start. Coming up, we use our Q25 index to tell you who's hot and who's not.
DOS SANTOS: Iceland's former prime minister has become the first world leader to be branded a criminal for his part in the global financial crisis. A special Icelandic court found Geir Haarde guilty of negligence and failing to inform his ministers about the events which led up to the meltdown of 2008.
He's cleared of all three other charges, though, related to the financial collapse and will face no punishment. Iceland created some pretty bad blood with its neighbors, such as, for instance, Britain and the Netherlands, wen it decided to let its banks go under, this wiping billions of dollars off of foreign and domestic savings elsewhere.
Geir Haarde says that the people of Iceland don't blame him for the crisis. I spoke to the former prime minister of Iceland just a short while ago, and I started off by asking him whether the charges indicate that he did hold some responsibility.
HAARDE: This is not quite accurate, your description. The allegation was that we had not discussed it thoroughly enough or frequently enough at cabinet meetings before the crisis hit. Nobody has been complaining about the way we handle the crisis, which has been described as very successful by a lot of people.
But it's important to note here that there were four remaining charges, three of which were of substantive nature having to do with the -- with elements in the financial crisis. But this fourth one was a purely formalistic one. Did we discuss enough or did we not discuss enough.
And they find me guilty on that one, even though they decided that no punishment was merited, and in terms of allocating defense funds, they were quite generous. So, I think I'm -- came very close to winning on that one, too.
DOS SANTOS: So, do you agree with their judgment that you didn't discuss it enough before the crisis hit? Could you have foreseen --
DOS SANTOS: -- the crisis?
HAARDE: Actually, I can tell you very honestly what I have told the press here today. I think this conclusion with respect to this one item is ridiculous. And I have just followed the tradition of all my predecessors as leaders of the Icelandic cabinet have practiced throughout the decades. And maybe I'm just taking a hit for all of them.
But the point is that this has nothing to do with the financial crisis and everything that has to do with the financial crisis was a non-guilty verdict as far as I'm concerned. So, I'm a little puzzled by this. Of course, I'm a little upset by it, too. And I think basically, it's ridiculous.
DOS SANTOS: Do you feel unwelcome in Iceland?
HAARDE: Do I feel unwelcome? Of course not. Of course not. It's quite the opposite. I -- I feel a lot of affinity and friendship wherever I go. People do not blame this crisis on me personally.
DOS SANTOS: Now, obviously, the crisis that hit Iceland -- it wasn't the only country to suffer, although it was particularly pronounced. And it's not the only crisis we're going to see over the next few years economically speaking. What lessons have you learned?
HAARDE: There are several lessons that -- can be learned from the crisis, although they are difficult to summarize in such a short interview.
For one thing, we relied on the European financial regulatory framework. We thought it was the best available. It has turned out that there were a lot of important flaws with receivers. We didn't see things coming because we relied on these regulations that we had imported from the European Union.
Number two, the free flight of capital can be dangerous, free flow of capital across borders, and unless there are certain measures, preventive measures in place.
Also, one of the things with the European regulations was the -- the cross-border banking activity. There were a lot of problems with the regulation of those things. And so on and so forth.
There is a lot of stuff that, not just we, but also a lot of other countries can learn from this. Take a look at what's happening in the eurozone. The -- I don't need to remind anybody of Greece, Spain, Italy, Portugal, or Ireland. I think in many ways, we are ahead of the curve. We are moving faster out of the crisis than these countries are.
DOS SANTOS: But people in your country, I distinctly remember when I was in Iceland for weeks covering your financial crisis, people in your country were advocating joining the euro as that was the only way out of their problems at the time. Your thoughts on that.
HAARDE: Well, that is -- that's another question altogether. It has nothing to do with the crisis of 2008. I don't think there is an active political bait on that issue in this country right now in relation to an application that the current government has brought forward with respect to joining the European Union.
I am against that myself, and my party is against it. I don't think joining the European Union would help us one bit right now, particularly not considering the circumstances and the state of affairs in the European Union and the -- economically speaking and in the eurozone.
So, there are certain benefits associated with having your own currency and having the currency flexibility that you get with that. That has been helping us, now, out of the crisis. The krona has devalued and our export industries are doing very well.
The downside, of course, is that the imported prices have risen. The exchange rate inflexibility that goes with the eurozone is hurting a lot of countries, and I don't think it would particularly suit our purposes.
DOS SANTOS: Time now for a little Currency Conundrum for you, there. Let's take a look at US dollars. Believe it or not, there used to be once a printed $10,000 bill in the United States. But the big question is, whose face was on it?
Was it President Woodrow Wilson, the former US Treasury Secretary Salmon Chase, or on the other hand, was it President Grover Cleveland. We'll have the answer to that interesting little question for you later on in this show.
As for the money that's still in circulation these days, well, the US dollar has made some solid headway against the world's other currency today. As European markets continue to fall, well, as expected, the euro has headed in the same direction in today's session.
Right now, the common currency is down around about half of one percent against the greenback. One half of one percent, as you can see, trading at 1.3139. The yen, on the other hand, though, is up as investors continue to search for safe havens.
DOS SANTOS: All this month, Vancouver is our Future City, and like so many others, well, it suffers from an awful irony, here. Because despite being lauded as one of the world's most liveable cities, not everyone, it seems, has a place to live.
Hundreds of people sleep rough in Vancouver every single night. So, this city is having to find new ways to deal with its homelessness problem. As Paula Newton found out, now, some of them seem to be working.
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT (voice-over): Every three years, city officials here in Vancouver comb the street corners counting each and every person who doesn't have a home.
DANSE CROWKILLER, HOMELESS MAN: Here in Vancouver 32 years. It's been about eight.
NEWTON: In 2011, they tracked down 2,623 people sleeping rough.
NEWTON (on camera): Housing is at a premium in Vancouver. The prices are the highest in Canada. This is North America's most expensive city. The pressure for affordable housing is a huge part of the equation in homelessness.
JUDAY GRAVES, HOUSING ADVOCATE, CITY OF VANCOUVER: Vancouver has seen incomes increase over the past decade by about 9 percent, and the cost of housing go up by several hundred percent.
You know that people simply can't afford housing. And of course, somebody falls out the bottom of that system, usually the most vulnerable people, and that's where homelessness comes from.
NEWTON (voice-over): Colin has been staying at this winter shelter since December.
COLIN, MOUNT ST. JOSEPH, RAINCITY: We all want to have a good life, and unfortunately, there are certain barriers that are preventing a lot of us from having a good life or returning back to a good life.
GRAVES: There's essentially a zero vacancy rate in affordable housing. Our Canadian government is the only G8 nation that does not have a national housing plan.
The solutions are incredibly simple. You have homeless people, you need housing.
NEWTON (on camera): The goal is to eradicate street homelessness completely by 2015. Progress is being made, but still over 700 people sleep rough every night on the streets of Vancouver.
COLIN: Being on income assistance, now, in our city, you're only allowed $375 a month for rent. Well, the options for renting a place at that rate are pretty disgusting. So, I forced myself to live outside. And the hardest part was maintaining hygiene, trying to have a shower every day and brush your teeth and stay clean.
NEWTON (voice-over): Now, for the first time in a decade, the number of people on the street is dropping. In central Vancouver, numbers are down by 82 percent.
GREGOR ROBERTSON, MAYOR OF VANCOUVER: We have focused on opening emergency shelters, low barrier shelters, so anyone can come in off the streets, building hundreds and hundreds of units of permanent housing to deal with this challenge.
MARK SMITH, EXECUTIVE DIRECTOR, RAINCITY HOUSING: What we found with the last homelessness count in Vancouver is that the number stayed static, relatively, of homeless, total homeless, but the number of homeless that were counted in shelters as opposed to on the street had increased by 50 percent. So, something right is happening.
NEWTON (on camera): A lot of people wouldn't believe that number, Kerry.
KERRY JANG, COUNCILOR, CITY OF VANCOUVER: I have it, it's verified every single year with our annual homeless count. That's the other big lesson. Make sure you have numbers and you can back them up.
It's all based on data. We want to know where they are, who they are, and where they're going to go next, so we keep very close tabs on the folks. And what we've seen is, police calls for service are way down. But we're also seeing that they're not in the emergency wards costing the health care system here a ton of money.
NEWTON (voice-over): Building affordable housing is high on the political agenda.
JANG: We were able to build 14 sites, about 1300 new unites of supportive housing. The city provides the land, senior levels of government provide the health care and the the actual capital construction.
NEWTON: Lyle Hayes has been living in this sheltered housing site in the downtown east side for a year and a half.
LYLE HAYES: This is my apartment. Full kitchen, full bathroom. You're not breathing in black mold, right? You're not flicking bugs off of you. It has security, but all kinds of benefits. It's awesome.
NEWTON: The city's future lies in rising to the challenge of providing more affordable homes, especially for lower-income people.
Paula Newton, CNN, Vancouver, Canada.
DOS SANTOS: Up next, the numbers are rolling in, and so, too, are our chips for our Q25. It's the only way to spend the earning season. Yes, you guessed it, the Q25 is up right after this break.
NINA DOS SANTOS, CNN HOST: Welcome back, I'm Nina dos Santos. This is CNN, and on this network, the news always comes first.
First, President Nicolas Sarkozy is courting right votes this year and just two weeks of tough campaigning to stay in power. Sarkozy finished second to Francois Hollande in Sunday's first round of voting. He said on Monday that he has a duty to (inaudible) supporters at the National France Party which gained (inaudible) support.
The Netherlands may be holding elections in the coming months after Prime Minister's Mark Rutte's resignation. He and his cabinet colleagues quit earlier on Monday after a far right party withdrew its support during the weekend's austerity talks.
Former Icelandic Prime Minister Geir Haarde tells me that he was made a scapegoat for the country's financial crisis. Earlier, a special court in Iceland found Mr. Haarde guilty of one charge of negligence for his role in the 2008 banking collapse. He was cleared of three other charges and will not face jail.
A Syrian opposition group says that security forces have killed at least 35 people in Hama this Monday. The city (inaudible) to show homes burning after being shelled. Activists say that seven people were killed elsewhere across the country. Two more U.N. monitors arrive today to monitor what's left of the shaky truce.
A Sudanese airstrike has demolished a market town in South Sudan. There's now growing concerns that Sudan and its southern neighbor could be on the brink of war over oil reserves. South Sudan broke away from Sudan after it became one of the world's youngest nations about a year ago.
DOS SANTOS: Turn our attention back to business news now. The Dow Jones industrial average is down by more than 100 points, at present dipping crucially below that 13,000 threshold. Alison Kosik is standing by to tell us all at the New York Stock Exchange.
Alison, what's going on?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, Nina, the good news is that you're seeing the Dow off its lows of the session, but with 90 minutes in the trading day, you know, there's anything can happen.
This is all about that political uncertainty that you've just been talking about, and if there's anything Wall Street hates, it's uncertainty. You know, investors, they're really not sure what to make of all that's going on in France and the Netherlands and Iceland. So what are they doing? They're selling their positions.
Also bellwether stocks like Caterpillar and Alcoa, those shares are falling, and that's partly because of a weak manufacturing reading that came out of China. So nothing really to help bring back any optimism today at all, Nina.
DOS SANTOS: (Inaudible) news of a corruption scandal dogging (ph) one of the biggest names in corporate America, Walmart. Tell us all about that. It's quite an intriguing story.
KOSIK: Exactly. So let me start with the share price of Walmart. Wal-Mart's actually leading the declines today, Wal-Mart's shares falling almost 5 percent right now. In fact, Walmart shares of Mexico down 12 percent on the Mexican exchange. Walmart says it's not going to be tolerating this illegal activity. In fact, it's doing its own investigation.
It met with U.S. Justice Department officials and the SEC. Now this all came out of a "New York Times" story that was written over the weekend that alleges widespread bribery and a cover-up in 2005 at Walmart. "The New York Times" says that Walmart, over the years, over several years, paid $24 million in bribes to get construction permits in Mexico so they can build more Walmarts there. So they were able to get zoning approvals.
You kind of cut through all that red tape much faster. Now Walmart of Mexico wound up telling the headquarters of Walmart in Arkansas about this, but "The New York Times" says Wal-Mart's headquarters concealed it from officials in the U.S. and Mexican authorities. They really just tried to make it go away.
So all of this coming to light now because of this "New York Times" article, Walmart is trying to repair its image. But as you can see play out in the numbers, Nina, investors really aren't sure how far this thing is going to go. There are big concerns about the legal ramifications, the financial ramifications, the possible fines that could follow and executives who could lose their jobs, Nina.
DOS SANTOS: OK, Alison Kosik, standing by at the New York Stock Exchange. Many thanks for that. It is indeed an intriguing story.
Well, earnings is in full swing these days and that can only mean one thing. Yes, it's time for another edition of the Q25. Now the Q25 is our own exclusive index to try and help you make sense of the kind of profit trends that we're seeing out there in some of these listed companies. What it is is it's very simple.
We take 25 companies and 25 sets of figures and, as you could imagine, two colors here, red and also green. And we give these chips to the companies that meet or exceed our expectations. Now our criteria are pretty tough.
We give the red ones, as you'd imagine, to those kind of companies whose profits failed to impressed (inaudible) parts of the balance sheet are also going to be examined. Here are the main criteria that we're using this time around.
Earnings growth has to be 8 percent or more for each of these companies compared to the same quarter a year ago. We also have to see revenues growing by about 6 percent or more, and we need to see some sign of quarter-on-quarter earnings growth.
And we also want to make sure that these numbers meet earliest (ph) expectations, perhaps most importantly of all, though, we also need to take a look at the outlook for the future for these kind of companies. And as ever, Maggie Lake joins us now live from New York.
You're quite a veteran of the Q25, Maggie, I have to confess I'm rather new to all of it. Let's start out with one of the big names that came out in American, Kellogg. It got about one out of five, according to our criteria, presumably that's an automatic red?
MAGGIE LAKE, CNN CORRESPONDENT: Yes, that's right. You know, it's an automatic red. And we should point out that this time around, for those who are also veterans, the criteria is a little bit lower, some of those numbers, than it was, say, last year. That's just sort of a reference, the fact that the profit expectations and the global outlook is a little bit weaker. So we adjusted the criteria a little bit.
But given the new criteria, Kellogg, rather, one out of five, here's the problem. This is actually a warning. We're going to get their full earnings report on Friday. They see weakness in Europe. You can bet that's a theme we're probably going to hear a lot of this earnings quarter. They also pointed to the fact some U.S. categories are weak. That's sort of interesting.
We're going to have to wait till Friday to find out whether that's a Kellogg problem or that's an economy problem. But it could be a sign that the consumer is wobbling and pulling back a little. So it could be important. But that's a red one, Nina.
DOS SANTOS: And another automatic red, there we go, it goes into our special set of figures. We're going to be taking a look at that board right throughout the course of the week. Let's move on and talk about another bellwether, something that you and I grew up with, Xerox. Five -- what did it get? It got an automatic red, zero out of five or something like that?
LAKE: Zero out of five. But you know, there's a little bit of a sort of story that's deeper for investors who have a long-term prospective. Looks awful. It missed on all of our criteria. But this is a company that's in transition. Those legacy businesses, those old big printers that we know, that's still dragging.
But services, they're actually doing pretty well. That business was up 10 percent, and that half of all their total revenues now. So it's not completely feeding through. It's still a red, but it looks like that shift is working and they understand that's where their future is. So give a long-term perspective, Nina, perhaps some hope there, but it's a red this time around.
DOS SANTOS: Unfortunately, yes, a red this time around. But it is, from what Maggie's saying, one to watch.
One of the companies that I would have focused on now here is Philips, which got a five out of five, so probably a significant green here, according to our criteria. It's back in profit. The euro is still a concern for it. But take a listen this comment from the CEO, Frans van Houten, because he says this company's back on the right track.
(BEGIN VIDEO CLIP)
FRANS VAN HOUTEN, CEO, PHILIPS: The European situation is far from great, but in Philips we have established midterm targets for 2013. We have plotted out our path to realize that is a journey with quite a lot of things to do. And I would certainly say and admit that, you know, that it's not yet a done deal. But we feel confident that we are on the right path.
(END VIDEO CLIP)
DOS SANTOS: So Frans van Houten, the CEO there at Philips. And we're going to be giving it a five out of five, and a notable strong green there, because obviously it's restructured a story is continuing apace.
Now here's a really good one, Maggie, a company you're extremely familiar with, General Electric. Tell us all about that.
It didn't seem to do very well in our criteria, but there's a different story behind the numbers here, isn't there?
LAKE: This is a -- this is a most interesting one, I think, Nina, of the day. And you're right. It gets a red technically, based on the criteria. Only one of them they exceeded. But it's a little confusing. This is based on when -- you know, the comparison's based on when NBC Universal is still in the fold. They sold that. It's a much smaller company.
When you take it on that basis, it actually beat expectations and underneath it, the numbers were really fantastic. That industrial, that good old GE is firing on all cylinders, Jeffrey Immelt saying we've got game right now. Listen to some of these numbers. Industrial orders rose 20 percent. Transportation orders up 40 percent. They had pricing power.
Sales regionally, Latin America, 40 percent, 53 percent for Southeast Asia, even in Europe they did well. So when you look at it from that perspective, I think we have to -- normally we'd give it a red. I think this time around we have to take into consideration that anomaly, and I say it's a green, not even a grudging green, it's a green.
DOS SANTOS: I'm hovering over the red, but I'm tempted to go with what you're saying, Maggie, there. So we'll make it nice and even, two of each. And of course, we'll continue to monitor these kind of companies, all the companies that come out with Maggie Lake as the series of the Q25 continues later on this week. We'll continue to fill up this board.
Up next, I'll see you (inaudible) isolation and economic lifeline for Myanmar. We'll be taking a look at how the country's political reforms could bring major benefits (inaudible).
DOS SANTOS: And (inaudible) for today's Currency Conundrum. Earlier on the show, we asked you whose face was on the American $10,000 bill, and the answer to this question is this, the former U.S. Treasury Secretary Salmon Chase. He was also the sixth Chief Justice of the United States and repeatedly ran for president. I have to say those are successfully (ph).
One country that's undergoing significant political upheaval these days is Myanmar. This country is now one step closer to rejoining the international economy after the European Union agreed to suspend most of its sanctions. An arms embargo will still remain in place, but E.U. ministers say that their most recent move was made in recognizing of Myanmar's steps towards political reform.
And as Paula Hancocks now reports, the country's leaders and many of its own people are hoping that this loosening of restrictions will usher in a new period of economic revival.
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PAULA HANCOCKS, CNN CORRESPONDENT (voice-over): This is backbreaking work. But at least it's work. Paid by the bag, taking a break means losing money for these men, or in some cases, teenagers.
These day laborers carry cargo ashore from ships that arrive at Yangon's main port from across Asia. Existing sanctions mean there are fewer ships from further afield.
Ko Tin Lwin is 32 and manages to send just over $1 a day back to his family in the countryside. He says it just about covers food, but that's it.
"I don't know if there will be work tomorrow," he says. "I have to come here every morning whether there's a job or not."
This 36-year old tells me this is the only job he can find. Everyone here would welcome easing of sanctions. A simple belief that more trade would mean more ships, which would mean more chance to earn money, to seeing one woman picking up grain that has fallen from the sacks, it's a reminder of just how poor some Burmese are.
HANCOCKS: There is a strong and willing workforce here in Myanmar. What's lacking is a strong infrastructure. Half a century of military rule has reduced this country from one of the richest in Asia to one of the poorest.
HANCOCKS (voice-over): With a new civilian government, albeit still heavily influenced by the military, changes are happening. The currency is moving towards flotation, investment laws are being updated and the International Monetary Fund is advising the Central Bank. But results may not be immediate.
TONY PICON, COLLIERS INTERNATIONAL: These things take time. Manufacturing investment is what will drive the country forward. Export- led manufacturing, which is what brought Thailand to where it is today, Malaysia and now Vietnam and in the future, Myanmar. And that's not something that happens on day one.
HANCOCKS (voice-over): Experts say it could be a few years before new investment translates into a better life for the average Burmese worker -- Paula Hancocks, CNN, Yangon, Myanmar.
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DOS SANTOS: Winter weather had made something of a comeback in certain parts of the U.S., and we're talking snow, rain and also ice. Who'd have thought that we're already in the midst of spring?
Our meteorologist, Jennifer Delgado, stands by to tell us all the CNN News National Weather Center.
Hi, Jen. Doesn't sound too good.
JENNIFER DELGADO, AMS METEOROLOGIST: No, Nina, you're right. It's not too nice over there. You know, we talked about how it's been so warm in parts of the U.S. We were dealing with drought as well as record warm temperatures. Well, now winter tried to make a comeback. Indeed, we're talking snow, ice, heavy rainfall.
As I show you right now on the radar, you can see where the snow's coming down. You can see where that winter precipitation still affecting parts of New York as well as Pennsylvania. Let me show you some of the snow that's been falling down. And we're talking some locations have picked up 25 centimeters of snowfall.
This is in Rochester, New York. Again, that's the upstate region. In addition to the snow, we're talking heavy rain. As I take you over to our graphic here, now it's affecting areas all the way up towards the North. We're also talking this rain, this snow moving into parts of Canada and we'll continue to see that as we go through the day and those temperatures are going to be falling considerably cooler overnight.
But then we'll start to see a rebound of those temperatures as we had towards the end of the week, though. Let me show you some of the delays out there. For Newark, Philadelphia delays, almost two hours. We are talking ground delays out there.
On the West Coast, San Francisco, but I haven't forgot about you in Europe. We're talking showers moving through right now on the radar. And the showers are going to continue to come down as we go through really the next 24-48 hours. You see this area of low pressure spinning just to the west.
This is going to be bringing the heavier bands down towards southern parts of France, and then spreading over towards east, including parts of Germany, southern parts of England, wet days ahead for you because we're going to continue to see a series of low pressure systems moving through. And this pattern means not a lot of sunshine out there.
We're also going to be talking about some high winds. As I show you the winds right now, sustained, 33 in Bordeaux, 26 in Paris. And we saw Hala (ph) earlier dealing with the cloudy as well as the rainy conditions. That's your pattern as we go through the next couple of days ahead.
High temperatures for your Tuesday, we're talking 12 for a high in Paris, 12 in London, 11 in Glasgow and then over towards the east, including Bucharest, you're our warmest area. We're talking a high of 24 degrees.
Now I want to leave you with this video coming out of the U.S. This is Lake Erie. And this gives you an idea how strong the winds have been. Look at this. This is out of Cleveland, and look at those cars there. I guess sort of getting a free car wash, those waves are crashing very close to that walkway out of Cleveland. And there's another video there as well. So I'll look at weather indeed, Nina.
DOS SANTOS: Jennifer Delgado, as always, many thanks.
DELGADO: Your weather doesn't seem so bad now, right?
DOS SANTOS: No, amazing pictures.
DELGADO: They really are.
DOS SANTOS: Anyway, speaking of -- speaking of stormy skies, thanks ever so much, Jennifer Delgado, there at the CNN International Weather Center.
Up next, the pain in Spain, a recession (inaudible) sparks the jobs migration to Britain. We'll be taking a look and see how an employment crisis in places like Portugal could be causing a shortage in other places, like Britain.
DOS SANTOS: Spain is officially in a recession. Its economy has now been in decline for the past six months. In a country with the highest unemployment rate in Europe, well, the slump is deeply unwelcome these days. Neighboring Portugal is also got painfully high unemployment and it, too, is in the midst of a deep recession as well.
As Atika Shubert now reports, those with vital skills like nursing are finding jobs quite a way from home these days.
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ATIKA SHUBERT, CNN CORRESPONDENT: Ines Goncalves is a nurse with a hectic schedule. She is one of more than 100 Portuguese nurses that came to work here at the Queen Elizabeth Hospital in Kingsland, England.
INES GONCALVES, NURSE: Probably the best decision I make ever.
SHUBERT (voice-over): She was motivated by the economic crisis at home. In Portugal, unemployment runs at 15 percent. Deep budget cuts have hit hospitals hard including Ines' classmates at nursing school.
I. GONCALVES: Being one year without finding any job, that's very hard. And the ones that found it were quit after a while. And they're the ones that are still holding a job. They're actually holding more than one job to be being able to save enough money to buy a house.
SHUBERT (voice-over): But Britain, like so many wealthy nations, has a nursing shortage.
SHUBERT: At the Queen Elizabeth Hospital here in Kingsland is a lot like any other district hospital here in Britain. There is a shortage of nurses. And so they've had to recruit overseas. In fact, in 2011, more than 3,000 nurses were recruited from across the E.U. Some of those countries are some of the hardest hit by the recession. Consider: Rumania is at the top of that list, but also Ireland and, of course, Portugal.
SHUBERT (voice-over) Julia Saunders was charged with finding dozens of nurses for the hospital's new wing, so she went to Portugal.
JULIA SAUNDERS, PRACTICE DEVELOPMENT NURSE: At the time, we needed that they got unequally (inaudible) nurses. So that was a good reason. Also their education is of a very high standard and also that they speak very good English.
Hello, Edna (ph).
EDNA (PH): Hello, there.
SAUNDERS: They have been amazing. We had our first Portuguese charge nurse. He gets his uniform in a couple of weeks, so (inaudible) and she's very good.
PEDRO GONCALVES, NURSE: So better here, are you?
SHUBERT (voice-over): Plus, she says, the Portuguese recruits like Pedro Goncalves seem to bring some of their homeland sunshine with them.
P. GONCALVES: We are Latin, I can say, Latin so you know, we are very approachable, so we go, how are you, and you know, very friendly and (inaudible) that one or two patients. They (inaudible) with different (inaudible) general day, we like it.
So we are not -- we are not with appetite, no?
UNIDENTIFIED FEMALE: No. I don't like sprouts (ph).
SHUBERT (voice-over) A friendly face, a sympathetic ear, a capable pair of hands. Until the economy improves at home, Portugal's nurses are taking their skills to Britain and elsewhere -- Atika Shubert, CNN, Kingsland, England.
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DOS SANTOS: In times like these, it's one email that no employee wants to see in their inbox and one insurance company actually managed to send it to everyone in the entire office by accident. Aviva Investors have apologized now after sending an email to its entire global workforce, saying basically, you're fired.
Thirteen hundred people at the insurance asset management arm got the same email, all at once. H.R. only meant to send it to one unlucky person. They later recalled the message and apologized, but it left with something of a red face. Of course, they're not the only ones here.
Remember Standard and Poor's, who managed to downgrade France just by accident back in November? They sent out an email saying that they had cut the triple-A rating (inaudible) before that decision had actually been finalized. And that, in turn, sent the French bond markets spiking much, much higher, even after S&P admitted that it had been a technical error.
Well, it didn't seem to help for investors because as you'd imagine, they went and downgraded it for real just a few months after that. So it was a little bit of a hint.
But by far, this might really be the cruelest one of the all. Three hundred people who went to the Danish lottery received emails from lottery officials saying that they'd won up to $50 billion. They had 90 minutes to bask in their good fortune before another subsequent email came through, this time apologizing for a glitch supposedly caused by human error, because the winnings only were about $35 apiece.
We'll have a full recap of the stock market action after this short break.
DOS SANTOS: In Europe it was a session of some sharp losses. Mining and metal stocks took a hit. But we also saw new data coming out of Germany, saying that manufacturing over there is contracting at the fastest rate in any three years.
Over in Italy and France, ST Microelectronics (ph) showed the biggest drop, those shares listed in Paris ending the day down to the tune of 14 percent. Investors weren't particularly impressed with the restructuring plan for its coventure (ph) with Erickson.
And on Wall Street, well, take a look at that. The big board is down in the red, partly due to those fears about European and also Chinese economies and the purchasing managers index figures, it is below the crucial 13,000 mark, as you can see, down about 0.9 of 1 percent or 115 points.
And that's it for this edition of QUEST MEANS BUSINESS. Thanks ever so much for joining me. I'm Nina dos Santos from London.
DOS SANTOS: This is CNN. These are the main news headlines this evening.
The French President Nicolas Sarkozy has been seeking support from far right voters as he enters two weeks of tough campaigning to stay in power. Sarkozy finished a close second to Francois Hollande in Sunday's first round of voting. The final round or runoff will be held on May the 6th.
The Netherlands may be holding elections in the coming months after the prime minister, Mark Rutte's resignation. He and his cabinet quit earlier on Monday after a far right party withdrew its support during weekend austerity talks.
Former Icelandic Prime Minister Geir Haarde says that he had nothing to do with the origins of the financial crisis. Earlier, a special court in Iceland found Mr. Haarde guilty of one charge of negligence in failing to inform his ministers about the imminent banking collapse in 2008. He was cleared of the other three charges and will not face jail.
A Syrian opposition group says that security forces have killed at least 35 people in Hama this Monday. Video posted online appears to show homes burning after being shelled, as you can see there. Activists say that seven people were killed elsewhere in Syria, two more U.N. monitors arrive today to take a look at what's left of the shaky truce there.
That's a look at the main stories that we're watching for you here on CNN. "AMANPOUR" is next.