CNN CNN


 

Return to Transcripts main page

QUEST MEANS BUSINESS

Global Market Sell-Off; Europe in Crisis; Spanish Bailout Fears; Italy Feeling Strain; US Stocks Tumble; Q25; Philips Beats Expectations; Euro Flat; Success for Singapore's Biggest Water Treatment Company

Aired July 23, 2012 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, HOST: Misery, mayhem, and it's only Monday. Spanish bonds spook global markets.

The chips are down for McDonald's as we kick off an Olympic-themed Q25.

And it's a new home for Lassie as Dreamworks goes classic.

I'm Richard Quest and, yes, I mean business.

Good evening. We are in the middle of a punishing global sell-off on stocks. It's a case of desolation, debt, and downright depression in Southern Europe, and it's driving investors towards the exit. The numbers speak for themselves, if you take a look --

(RINGS BELL)

QUEST: -- at the New York market. The Dow Jones at the moment is down 127 points. It's a loss of just about 1 percent. Investors are heading for the safe havens of US Treasuries, which are also currently at the moment down at record lows.

If you take a look at the picture in Europe, then it is even more disappointing, some would say downright depressing, what happened in Europe. The FTSE was off 2 percent, the XETRA DAX down 3. But look in Athens, where the market fell a whopping 7.1 percent, off 44 points. The market is just 586 points.

So, that is the overarching scenario that you have at the moment. New York is down, the European markets are down, and the reason, now you are up to date with the market numbers, is what was happening in the eurozone.

The numbers tonight, and there are three main danger zones. First of all, the -- Spain, where the region of Spain, Murcia, is set to ask Madrid for aid. It denied it was going to need it immediately. It said, however, that probably next year.

Ten-year yields on ten-year bonds, 7.5 percent. That's a euro-era record. And there is short selling ban to try and equalize the market or at least stem some of the chaos and confusion taking place.

Remember, we had a ban on short sellings in 2008 and 2009 across large parts of the world, during the worst moments of the financial crisis.

Now, Spain has introduced it. Greece and the way the Greece market is performing, "Der Spiegel" says the IMF is thinking of pulling out, planning to abandon, that's a report in the German papers. The IMF has denied the rumors, but however, the prime minister says, "This is our Great Depression." Those are the words that the prime minister used.

The troika arrives in Greece soon, and they will be analyzing whether Greece has actually met the criteria, whether it's kept up with its promises of the last bailout, the so-called memorandum of understanding.

And to Italy, where there was also problems. Banking stocks were suspended, and another short stocks -- short selling ban that took place.

So, there you have the three areas of concern, and they were the reasons the market fell so sharply. Our correspondents are watching. In Madrid, it is Al Goodman. In Rome, it is Ben Wedeman. We'll start with you, Al, in Madrid. The scenario that we are seeing, far from getting better, is actually seemingly getting worse.

AL MADRID, CNN MADRID BUREAU CHIEF: That's right, Richard, and the only reason that the Madrid stock market closed down just 1 point -- it was down 5.5 points when it was bleeding the worst -- is because of the ban on the short selling for the past three months.

There was a similar measure in Spain last August until February. They let it go. But because of the turbulence, they put it back on.

Now, the fear is that Spain will need the full-scale rescue bailout and not just for the banking sector. The Spanish economy minister was in Parliament this day explaining the details of the banking sector bailout, which was approved last Friday by the eurozone, up to 100 billion euros, the first tranche, 30 billion, to come by the end of this month.

The minister is saying that Spain does not need the full bailout, and he said -- he had this to say about the markets. Let's listen.

(BEGIN VIDEO CLIP)

LUIS DE GUINDOS, SPANISH ECONOMY MINISTER (through translator): There are irrationalities in the behavior of the markets in the short-term of extreme nervousness, which the government can get into.

I will repeat: Spain is not the only one affected. Spain in this moment and earlier is like the dyke where all the uncertainties surrounding the euro are beating onto. But it goes further than Spain. It's about the future of the eurozone, which I will repeat, in the short term, we can't, unfortunately, get into.

(END VIDEO CLIP)

GOODMAN: But investors really, as much as he tries to put the problem elsewhere, Richard, investors are worried right here about Spain, especially with the regions, that Murcia region, you mentioned, is now the second region that's going to be asking for a bailout from Madrid, and the investors say where's Madrid going to get that money to help its own regions when it can't help anything else? Richard?

QUEST: Briefly, Al, a breathtaking does of honesty, there, from the minister. He admits all the euro problems are being heaped on Spain's doorstep, and he admits that this is a question of the future of the euro.

GOODMAN: Indeed. And that's what they -- basically, the subtext is, European Central Bank, where are you? Will you come to our rescue now, please? We heard that from the European Commissioner, Joaquin Almunia, also a Spaniard.

Basically, a chorus of voices, again, hammering away, saying bail us out, please, or bring in some -- not bail us out, but bring in some money to buy the bonds and bring these bond prices down. Richard?

QUEST: Al, stay where you are in Madrid for the moment. Ben Wedeman, our correspondent in Rome, good to see you in Rome, Ben, and you arrive in Rome as the situation deteriorates and there is a feeling of crisis tonight, once again.

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, certainly the weather is bad for Italians. This is one Monday they definitely will hate. They saw the stock market go down by 5.5 percent. It recovered to 2.8, but several stocks, including those of major banks and a major insurance company, trading had to be stopped because they fell by more than 10 percent.

The Italians are very worried that with Spain needing, clearly, some sort of assistance that if Italy's economic situation continues to deteriorate, there won't be any money left over for this country, even though the prime minister, Mario Monti, insisted at this point, Italy does not need a bailout. Richard?

QUEST: Is there -- and I know it's difficult to gauge, but does Italy see itself in the same boat as Spain, or is there, if you like, a qualitative difference to how they view their position?

WEDEMAN: Well, it is a much bigger economy. But it does really suffer from many of the same problems. It's expected that the Italian economy will shrink by 2 percent over the next year. And if you look at Italy's debt-to-GDP ratio, it's now 123 percent, which is worse than Spain, and only second to Greece itself. Richard?

QUEST: Ben Wedeman, who is in Rome, where I've just read it's absolutely teeming down. Al Goodman is in Madrid, where things are looking slightly more cheerful on the weather front, if not the economic front.

A reminder of the markets and how they traded, which is our top story for you tonight. Very serious losses in major markets, not least in London, Frankfurt -- Frankfurt saw the worst of the session -- Paris down nearly 3 percent. And as you heard from our correspondents, we saw large losses in Italy and down -- Athens off some 7 percent.

When we come back in just a moment, it's the Q25. The earnings season is well underway, and we'll take a look, because we'll give it an Olympic flavor: who deserves gold on the earnings?

(COMMERCIAL BREAK)

QUEST: So, the sell-off on Wall Street, it started right at the opening bell.

(RINGS BELL)

QUEST: Alison Kosik's in New York. Alison, we know -- I'm guessing, forgive the impudence of assumption, but I'm guessing it is largely on the back of what we saw -- what we're seeing in Europe that's caused it. But it's quite a big sell-off that you're having.

ALISON KOSIK, CNN CORRESPONDENT: It was. It was, actually. Stock could come back quite a bit since we did see that sell-off at the open. The Dow right now is down 109 points, but it was much, much worse, Richard.

When the opening bell rang, you saw stocks drop almost immediately within, I'd say, the first half hour, you saw the Dow down 240 points. So, yes, it's come back quite a bit. It looks like investors sort of took a breather for a little bit here.

But you know what this is about? This is about Spain and Europe and the huge debt issues going on. Everything has been simmering in the background, and it literally came to a boil on a global level.

Now, you have to remember, the way the US sees it, Europe got very quiet over the past few weeks, Richard. There wasn't really much headline news coming out, especially, really, no negative news.

So, everyone started focusing on the United States' issues. Our own economic slowdown here, and manufacturing and jobs, the fiscal cliff. The fiscal cliff, of course, when taxes are going to go higher, spending cuts will happen, everything all at once.

We also focus on a few bright spots in the past couple weeks in housing, and even earnings.

QUEST: All right.

KOSIK: But you know what? Now the focus is back on these much bigger global issues, and this is what's weighing on the market today, Richard.

QUEST: Alison Kosik in New York with the US side of the story, where the market is off sharply as well.

So, let's factor all this in. We are four nights away from the Opening Ceremony of the 2012 Olympic Games -- you needed me to tell you that. Here at QUEST MEANS BUSINESS, we've got our very own world-class competition underway, truly global. It's the Olympic edition of the Q25.

Now, you are aware that the Q25 is our exclusive quarterly indicator to help you make sense of the earnings. And we have five strict hurdles that companies must get through. I'll be careful doing that on air, it will all end in tears, grief, and disaster.

Anyway, this is how you actually get a gold in the Q25, gold medals that we are giving away. And there are demanding hurdles that you need to get. You get a red -- we view those -- if you stumble and fall.

This is the first one. There has to be earnings growth of at least 3 percent. There has to be revenue growth, 5 percent at least. There has to be quarter-on-quarter, Q-on-Q earnings growth. Now, that's not year-on- year, that's Q-on-Q versus the previous quarter. And of course, you've got to beat expectations by 3 cents a share. These are the criteria. And you've got to give positive guidance.

Now, if you get all five, you automatically get a gold. Similarly, if you get none, you automatically get a red. What happens, of course, is if you get two or three, then we have a vote. Maggie Lake is in New York to help us sort out the golden Q25. Hello, Maggie.

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Hi, there, Richard.

QUEST: All right, we're going to start with one from last week, because it was a busy end of program last week, so we didn't have a chance, to, and we're going to start with Microsoft. Microsoft and how the company performed.

It's an automatic -- Microsoft -- it's an automatic gold, but if you look at the way they performed ignoring, Maggie, the headline "loss," you were impressed?

LAKE: Yes, that's right. And we did have to ignore that loss. And you know, the interesting thing here, Richard, is that they still are having an issue with Windows. Those Windows sales were down. But investors -- analysts, particularly -- are really looking past that.

We're so used to Microsoft being uncool, the lagger, the boring stock, sort of -- in the past. That acquisition of Skype really filtering into the bottom line. We all kind of raised our eyebrows when they did it. They were executing well on that. That division saw revenue up 20 percent, so investors pretty good about Microsoft's prospects for the future.

QUEST: So, Microsoft kicks us off with a gold. And we ought to tell you, by the way, that about 60-odd percent of the results from the S&P 500 so far are beating expectations. GE used to be a -- as so goes America, so goes GE, or whatever that phrase used to be.

If we look at GE, it just about meet the criteria. And we had to have a vote on it, and we had a vote on it, Maggie, we came up with what?

LAKE: We came up with a grudging green, Richard. I want to mention, yes, they're beating expectations, but those are lowered expectations, let's not forget. So, the bar's been lowered.

GE -- listen. They're boring, they're sort of traditional, but that's been a source of stability in these uncertain times, and we can't look past that. They didn't meet all the criteria. Some of the things they missed on had to do with units that they've either closed or reduced and the costs still associated with that, so we kind of have to look past that.

And when we were all talking, the thing that jumped out is the fact that they're reaffirming their guidance for double-digit growth --

QUEST: Right. That --

LAKE: In this kind of environment, with some of the misses we're seeing, that's pretty impressive.

QUEST: And when you get to that level, you don't necessarily get enthusiasm over the hurdles. Instead, you get what we call the grudging gold.

Now, Maggie, McDonald's. McDonald's, I'm afraid to say, even though - - look at this picture, Maggie. McDonald's is just opening up at the Olympic Park. That's a live picture of the largest McDonald's in the world.

Apparently, it's going to have 1500 seats. It'll serve tens of thousands of meals every day. McDonald's is a top-tier sponsor, despite all the controversy. But notwithstanding the Olympic Park, I'm afraid it got an automatic red, because its results were pretty poor, Maggie.

LAKE: Yes, it did, and that's fitting, Richard, because they are the sort of global behemoth, aren't they? They're the bellwether -- I mean, there's the hamburger index named after them. There's a great headline from our colleagues at Fortune: "Even a Big Mac seemed expensive last quarter."

When you want to get a gauge on what's happening on global growth, people love to look at McDonald's. This is a company that has performed excellently, met every challenge over the last ten years, they sounded worried --

QUEST: I --

LAKE: They're worried about the future, they're talking about global head winds. And -- go ahead.

QUEST: I was -- I had to -- I was in a minority, here. It was an automatic red, I didn't have much say in the matter, but I though their same-store sales year-on-year, we should've given them more credit for.

LAKE: Well, we did give them credit. Here's the problem. And we know Europe's a problem, so if it was just that, that might have been enough to get us over and give them a gold.

But they're talking about flat sales in Asia, China, Africa. The emerging markets, this burgeoning middle class, which is where the future sits for a lot of these global food chains. So, that's really worrying to investors, and that was one of the things that sort of tipped us that we had to give them a red.

QUEST: She's a very hard woman when it comes to the Q25. Very hard woman.

Philips over here in Europe. Philips got a gold medal from us. It met the criteria, and if the way Philips performed, it got a gold medal, and Jim Boulden spoke to the chief executive, Frans van Houten and asked of the global slowdown would eventually hurt the numbers, and who knows? A gold may not last for long.

(BEGIN VIDEO CLIP)

FRANS VAN HOUTEN, CEO, PHILIPS: We are worried across the world about a slowing economy, but then, we need to look for the pockets of growth, and we've seen great traction in Russia, in Turkey, the Middle East, Southeast Asia.

And also, the United States is still holding strong. And so, the uncertainty in the future is there, but then as good entrepreneurs, we need to fight for the business, and we'll do.

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Of course, you can't do anything about the euro, but you are obviously a company stuck I the middle of a very weak euro at the moment. And also, with rising commodity prices, though we have seen oil coming down. You can't influence all of that, but how do you see that affecting Philips this year?

VAN HOUTEN: The economic outlook is not great, and some of the factors like currency, raw material prices, do affect Philips. But I'd like to underline that Philips is predominantly a case of quote-unquote "self-help."

There are so many things that we can do to better execute, go faster, and grab opportunities, leveraging our strong brand and innovation to grow the company, that I'm not so worried about our future. We are confident that we can make our 2013 targets, and beyond that, there will be more potential to unlock.

(END VIDEO CLIP)

QUEST: The CEO of Philips. Maggie, thank you. We've got more Q25 in the week ahead which, as it gets even more difficult to work it out. Maggie Lake. And the Q25 criteria, you can see on the website, of course.

Now to the Currency Conundrum. Everyone likes a souvenir, and London Olympics, the coins are proving very popular. The Royal Mint says people are hoarding more of the special 50 pence pieces than any other coin since decimalization.

How many have they put away -- how much have they put away? $5 million worth, $10 million, or $15 million has been secreted away in souvenir coins? The answer later in the program.

The euro is flat, trading at a new 2-year low, close to a 12-year low against the yen. Japan's currency strengthening on the majors. Those are the rates --

(RINGS BELL)

QUEST: -- this is the break.

(COMMERCIAL BREAK)

QUEST: So, the World Bank considers Singapore to be amongst the best places to do business in the world. Now, you'll know that last week, I was in Singapore in the city-state, and I got the chance to meet the chief executive, and extraordinary woman, of the company Hyflux. It's a company that embodies Singapore's success as a base for innovative technology.

(BEGIN VIDEOTAPE)

QUEST (voice-over): Out of a tap. The bottle. The glass. We drink it, swim in it, wash in it. Clean water. It's a basic necessity, still in accessible to about 800 million people on the planet. And it was a problem that led a young chemist to change her life.

OLIVIA LUM, CEO, HYFLUX: When I was 28 years old, when I started this company, and I was very naive. And of course, I had no capital, no customers, no technologies.

QUEST: Olivia Lum sold her car and house to raise money. The company she created, Hyflux, is now worth a billion dollars, and has sold its water treatment systems to more than 400 countries.

LUM: Many countries in Southeast Asia, in China, in India, North Africa, and the Middle East.

QUEST: It's called reverse osmosis and is the key to the Hyflux design. Membranes, many times smaller than the human hair, are used to turn sea water into drinking water, and even to recycle waste water.

Singapore is an island nation, with a long struggle for fresh water security. Here, the Hyflux system is used to produce 10 percent of the country's water needs. Lum believes Singapore has grown to be a lot more supportive of young businesses over the years.

LUM: Now, you have so many incentives given by the government, to promote entrepreneurship. Twenty years ago, you had to depend a lot on yourself.

QUEST (on camera): What's been your biggest contribution?

LUM: One of the initiatives that I always wanted to encourage are people in Hyflux is that we have to keep searching for ways to produce the most affordable work in the world. And there is always this passion that drives me.

QUEST: Does that still drive you?

LUM: Yes.

QUEST (voice-over): Being driven by something as simple and as see- through as a glass of water.

Richard Quest, CNN, Singapore.

(END VIDEOTAPE)

QUEST: Coming up next, the symptoms of Europe's sick economy. The vital signs. And we will talk through the medicine and the prescription. Ask Bob Parker. He's after the break.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN -- excuse me. On this network, the news always comes first.

Opposition activists say at least 30 people have been killed across Syria on Monday.

(BEGIN VIDEO CLIP)

(EXPLOSION)

(MAN SPEAKING IN ARABIC)

(END VIDEO CLIP)

QUEST: This video posted online appears to show sellings in Talbiseh in Homs province. Earlier today, the Syrian Foreign Ministry said any chemical weapons they have would only be used against foreign attackers.

News agencies are reporting that Syria has rejected the Arab League's offer to provide a safe exit for President Bashar al-Assad. A Syrian spokesman reportedly said the government was sorry that the Arab League had, in their words, "descended to this level."

Widespread attacks across Iraq have claimed the lives of at least 82 people. Eight bombings in the oil-rich city of Kirkuk are blamed for five deaths. The deadliest rounds of blasts came in Taji, north of Baghdad, were 32 people were killed. Some fear the attacks signal a return to sectarian violence.

The suspect in the Colorado cinema massacre has made his first court appearance. The judge told James Holmes his rights and informed him there wouldn't be any bail for now. Holmes' hair was dyed red and he was unshaven. He gave little indication that he was paying attention throughout the brief proceedings. Formal charges will be filed next week.

Also in the United States, Penn State University is being punished by college football's governing body for not doing more to stop the former coach, Jerry Sandusky, from abusing children. The school with pay at $60 million fine. Penn State's football team will also forfeit a number of scholarships. The team cannot play in the post-season for four years.

(MUSIC PLAYING)

QUEST: Beyond the chill of those plunging stock markets and the fever of soaring Spanish bond yields, there are important symptoms of Europe's economic success. These are the ones that show just the scenario. U.S. 10-year bonds have fallen to record lows. They are the safe haven.

The yield on the 10-year is now 1.39, which is even more extraordinary when you think that the U.S. is facing its own deficit problems and the fiscal cliff and the logjam in Washington. And still the 10-year bond comes down to just at about 1.4 percent. German bunds and U.K. gilts also valid, which is remarkable, bearing in mind the state of the U.S. economy.

Look at Brent Crude, down nearly 3 percent at just -- I say just -- it's relative -- down $3, $103.76, a sign that investors are losing confidence. If the global recovery is in some way in jeopardy, less oil is used, even by major countries like China and of course that's what we're seeing here.

And this is rather worrying. Eurozone consumer confidence, if you can call it that, fell more sharply than expected. The commission says its gauge dropped a near three-year low of -21.6 from -19.8. Now that low, - 19.8 was deeply pessimistic.

That -21 clearly shows it's a long way before there's any form of recovery. Bob Parker calls this the vicious circle and he says that circle is the relationship between the sovereigns and the bond markets and the equities that's pushing inexorably countries like Spain towards a full- blown bailout. Bob's the senior adviser at Credit Suisse, and we always welcome him on this program.

I asked him why all the promises of E.U. cash, of bank bailouts in regions, is still not stopping the rot in Spain.

(BEGIN VIDEO CLIP)

BOB PARKER, SENIOR ADVISER, CREDIT SUISSE: I think investor behavior is very interesting at the moment because investors are saying if there is a possibility -- not a probability -- a possibility that Spain may have to go for a bailout, then look what happened with the yields on previous bonds, which went toward the bailout. They'll say we're going to lose money.

And because they're worried about losing money, you have an investor strike towards Spanish bonds.

QUEST: But what investors are doing is creating the self-fulfilling prophecy now.

PARKER: Well, that's true, because if you have investors exiting the Spanish bond market, which has happened --

QUEST: Yields are going up?

PARKER: Yields go up. The -- because yields go up, that increases the probability of Spain having to have a bailout.

So you're absolutely right. You have this very unpleasant vicious circle. And by the way, if yields go up, that compounds the recessionary (ph) problem.

QUEST: In which case, what breaks the vicious cycle? Because so far, 20-odd E.U. summits or however many it is, numerous bailouts and lots of hot air has done -- has failed.

PARKER: Well, let's make one point, which I think is very important, which is the economic fundamentals of Spain and the debt profile of Spain is nowhere near as bad as it was in Ireland or Portugal or Greece when they had to go for a bailout.

And in a situation like that, what works is very strong intervention by a central monetary authority, in this case, it would have to be the ECB because the EFSF and the ESM are not prepared for that very strong intervention.

QUEST: And that's the one thing so far the central bank for the whole of the Eurozone seems singularly reluctant to do.

PARKER: Well --

QUEST: Which, you would do it if it had been a national central bank.

PARKER: Correct. And I (inaudible) -- look at what the Bank of England has done with quantitative easing. It is -- has been the largest buyer of British government bonds. Likewise in the States, with quantitative easing, you know, the Federal Reserve now owns over a trillion of U.S. Treasuries. Now what we want is the ECB to come in as a big buyer of Spanish and potentially Italian bonds.

QUEST: Don't hold your breath.

Have we moved into a more dangerous part of this drama, if you like, now?

PARKER: Well, I think we have, and the reason why I say that is that you do have this very bad feedback loop of investors on strike, because they're worried about losing money, bond yields go up. That compounds the Spanish recession and also the Italian recession. That puts further pressure on the banks because they own Spanish bonds. And therefore they have mark-to-market losses.

So you have this very unfortunate and really quite dangerous feedback loop.

(END VIDEO CLIP)

QUEST: Bob Parker of Credit Suisse, and always good to have him on the program.

Take about -- I know -- $13 billion to $15 billion, an enormous amount of effort and a great deal of goodwill and hard work. And you end up with this picture, which is the Olympic stadium as four days to go before the start. We'll look at the translating the Olympic motivation into the drive to make profits. If you're an Olympian, how can you motivate others to succeed? Here after the break.

(COMMERCIAL BREAK)

(MUSIC PLAYING)

(BEGIN VIDEO CLIP)

QUEST (voice-over): The answer to the "Currency Conundrum," how much is the British public supporting of London's Olympic coins worth? The answer is C, $15 million. The World Mint estimates more than 70 percent of the commemorative coins have been taken out of circulation by those wanting a souvenir. They're the first U.K. coins to be designed by members of the public.

Hardly surprising, if it's -- if it's a commemorative coin, you're not exactly going to sort of spend it and on a bag of crisps, are you? Well, there we are.

Seven years in the making at the cost of $14.5 billion, 101/2 thousand athletes fighting it out, you're going to hear all the statistics over the next few days. There are four days to go until the Olympics. Alex Thomas is at CNN's Olympics Bureau. He joins me now.

You know, this is the sort of the final hurdle before the kickoff, to mix my metaphors beautifully. And with that in mind, Alex, what is the -- I suppose the mood and the feeling and the fervor?

ALEX THOMAS, CNN CONTRIBUTOR: Well, it's interesting, because the mood here in the CNN office is very high. This is our first time at broadcasting from the Olympic park. This is what you'll get used to seeing on our channel for the next three works or so, Richard.

And we'll have Neal (ph) our camera man, just pan around the excellent view from the main stadium that will host the opening ceremony this Friday, `round past the athletes' village and on towards the white mattress (ph) shaped building which is where the Olympic basketball will be held.

The U.S. firm gold medal favorites in that, of course, because of all their NBA stars, and the kind of Pringle crisp-shaped building, as it's been unkindly referred to; I quite like it, actually, the kind of molded curvature of the Velodrome, which is where the Olympic cycling will be held.

And you might be able to hear a bit of music as Neal (ph) pans back towards the Olympic stadium, Richard, because they're having a full technical rehearsal for the opening ceremony, which is costing around $40 million, which is at least half of what it cost in Beijing.

But nonetheless, movie director Danny Boyle, who's in charge of it, says it's going to be spectacular based on the theme of Shakespeare's play, "The Tempest."

QUEST: All right now, we saw earlier in our program the McDonald's, the largest McDonald's. And we know that there's been a bit of a row about whether or not people can enter the stadium wearing rival products and Pepsi T-shirts, wearing Cokes for Tier 1 (ph) and all that sort of thing.

Is -- I mean, the trademark police will be out in force. But the London mayor says they're going to perhaps be reasonable. Is that your understanding?

THOMAS: No, I can't believe that happening at all. And I'm a big fan of Boris Johnson as mayor of London. He's lots of fun. Well, actually, he batted in and watched some of our filming a few days ago and actually had a bit at trying to report into the camera. But, no, we've seen this at major sporting events in recent years. And it's something that's not going to go away.

Richard, you may remember during the 2010 World Cup in South Africa, all those very attractive blonde-haired women --

QUEST: I do.

(CROSSTALK)

THOMAS: -- mini-dresses getting arrested because they were trying to very subtly advertise a Dutch beer. It was the tiniest label on the hem of their skirt. But the FIFA (ph) police in that instance were on it like a shot.

And you mentioned McDonald's. I've been told that here in the media center, the catering for the media alone does not access the public -- they can't sell chips on a plate on their own, because that's McDonald's remit. You can only have it with a piece of fish. That's how petty these rules get.

QUEST: You shouldn't be having any chips anyway. You should be having a light -- you should be having a light salad or something, since it's the Olympics. All right. Alex Thomas, who I suspect, over the next three weeks, is going to eat more junk food than -- as everybody always does at these sort of things as the hours get longer and the night gets later and the food gets more stodgy.

Let's talk on the question of how you actually take an Olympian and you actually motivate other people.

Roger Black took his Olympic motivation from the stage into the boardroom, and he's started BackleyBlack. Together with fellow British athletes Steve Backley, the motivational speaking business draws upon the pair's knowledge of what drives. And here it is, find your passion, create empowering beliefs, power through clarity, surround yourself with talent and deliver your maximum.

When you see it put like that, it seems pretty straightforward. Perhaps (inaudible) say the blinding obvious. Got to be careful (inaudible) --

ROGER BLACK, OLYMPIC MEDALIST: There's nothing new there.

QUEST: (Inaudible).

BLACK: But you've got to deliver it, and that's the point. We -- what we did in retirement was we canvassed many of our Olympic peers, people who have achieved sustainable performance. And we narrowed it down, what were the five non-negotiables that you would say to everyone to stand on the Olympic rostrum must have?

There are so many facets to Olympic performance. But these, for us, were the five non-negotiables. Based around the concept that talent is not enough, everybody goes to the Olympic Games is talented by definition.

QUEST: Right. Exactly my point. Exactly.

BLACK: But they don't all win the medals.

QUEST: Right. Well, there's the medal that you won, hold it -- now you tell me -- this is in Atlanta in 1996. Now you tell me what additional besides talent did you have to get this?

BLACK: I won that medal when I was 30 years old. I had five operations up until that point. I'd had successes, disappointments or whatever, and I came back to have my greatest day, age 30. So it wasn't just my talent. It was attitude, it was behavior. I raced against many people who were as talented if not more talented, who never won the medals.

In the same breath, there were phenomenal people like Michael Johnson, who won the gold medal against me in Atlanta, who had both. He was somebody with enormous talent. I would never, never deny the talent. But he also had a fantastic attitude.

QUEST: If you haven't got the attitude, or the behavior or those things that we've lost them (inaudible) --

BLACK: You (inaudible).

QUEST: OK. But you won't really (inaudible) -- how can you manage to draw it out, these sort of things? Surround yourself by talent. I've got a brilliant team of producers. Deliver your maximum, going at full throttle here.

BLACK: Well, (inaudible) more than that. Deliver your maximum is the acknowledgement that there is a space of performance that exists, whether it's in sport or business, but the top Olympians will acknowledge that space exists. Some people don't. They put a ceiling to their level of performance.

People who stand on the Olympic rostrum, they don't put the ceiling. They don't put a barrier. They're always striving to achieve.

And I think it's the same for great leaders in business. And we do in our business is tell the stories, open up people's minds and then work alongside business coaches, experts in the business field, that translate Olympic performance into the business because, of course, you know, you're an Olympian. It's not the same. But there are some similarities and there are some differences.

QUEST: And getting that last bit that you just talked about, being able to think above and beyond, that's really the key.

BLACK: Absolutely, absolutely. Because as I said earlier, everybody's talented. Usain Bolt is the most talented, gifted athlete the world may have ever seen. He is not guaranteed in 10 days' time or two weeks' time to have the gold medal put `round his neck because he's coming into the Olympic Games off a defeat.

Now if Usain Bolt wins the 100 meters and the 200 meters in London, it will not be his talent that has done that. It will be a combination of his talent and his attitude, because he's not having it his way. Four years ago in Beijing, he could turn up and his talent dominated. It's very different now.

QUEST: Do me a favor. Come back again and talk about these things. It's fascinating (inaudible) because we haven't really -- and we need to talk more about this in the future --

(CROSSTALK)

QUEST: -- about how you actually unlock --

BLACK: Well, because it is fascinating --

QUEST: It is.

BLACK: -- whether it's in sport or in business, why do certain people achieve and others don't? And it --

(CROSSTALK)

QUEST: We haven't time to get into the nature of --

BLACK: (Inaudible).

QUEST: Good to see you.

BLACK: You, too.

QUEST: Congratulations on that.

(Inaudible).

Coming up next, Shrek, Lassie and Casper, all under the same roof, a deal that could bring classic characters to DreamWorks movies. We've got (inaudible). He's after the break, QUEST MEANS BUSINESS. Good evening.

(COMMERCIAL BREAK)

QUEST: Now residents in Hong Kong are getting battered by a typhoon as we speak. We'll talk about that with Jennifer Delgado at the World Weather Center.

Slightly silly question, perhaps, I mean, there are typhoons and there are typhoons. How bad is this one?

JENNIFER DELGADO, AMS METEOROLOGIST: Well, you know, right now it is -- we won't call it a super typhoon or a strong typhoon, but it certainly it is a powerful system out there, and it's been bringing some very incredible amounts of rainfall for areas right along that southern part of China.

Now as I show you on the satellite imagery, the winds right now up to 130 kph, this time yesterday, it was a tropical storm. So we have seen strengthening out of the system. But it's just hours away from making landfall. As you can see how impressive that eye is, very nicely tightly wound.

And we're going to continue to see weather conditions deteriorating across the region, talking strong winds as well as I pop up over and show you on the radar, giving you an idea of very how close this system is.

This is actually Hong Kong. This is Macao, this is the Pearl River. So it's going to be making landfall just to the west, again, of Hong Kong. You can see over to the west, as I say, to Macao, but anywhere along this area they're going to be dealing with some very strong rain bands and we're also talking about, again, some very gusty winds.

Even now the winds have been sustained in some of these locations up to about 99 in the last hour. Right now, we're looking at a wind of 74 for Hong Kong, 80 in some of those locations right along that southern part of the Guangdong coastline. So certainly this is going be very tricky, a lot of people, of course, not going out.

Let me show you some video of what it looks like. This coming in to us, and you can see people being whipped around, using the umbrellas. And you know what, Richard? Umbrellas do not provide much protection when you're dealing with -- you're also seeing some of those trees down. We're going to be certainly getting some more damage reports coming out of this area.

As I take you back over, I want to track the future of Typhoon Vicente. Now the winds, they said, 130 kph. It's going to be moving over towards the west. You can see still into that western part of the Guangdong coastline, and then it's going to be spreading over towards areas, including northern parts of Vietnam as an area of low pressure.

But right along this path, we're still going to be talking about roughly 25 to 50 more centimeters of rainfall, so flooding is certainly going to be an issue. Now for Europe, weather's not so much of a problem, not unless you're in Italy right now.

We do have an area of low pressure. It's been cut off up towards the north, over towards the east, a lot of sunshine out there. In fact, Richard, I guarantee you this, you're going to get a little sweaty tomorrow. We're expecting a high of (inaudible) --

(CROSSTALK)

QUEST: I am. I am. What -- (Inaudible) what point can you tell me what Friday night will be like in London?

DELGADO: Well, we do have a chance of storms rolling in later on into the evening -- I know, it's opening ceremony time, but, hey, now you get a little time with the sunshine. Enjoy it. Get a little sun. Warm it up. But it looks like there could be a change in the pattern back to the way it was. (Inaudible).

QUEST: All right. Many thanks indeed.

DELGADO: I always leave you with a bad note.

(LAUGHTER)

QUEST: Yes, well, never mind. Nothing new there, then.

All right. DreamWorks Animation has added a friendly ghost and the Lone Ranger to its roster. It's the movie studio behind "Shrek" and "Madagascar," and it's now bought a company called Classic Media. You've not heard of it? Well, Classic Media owns the rights to TV classics like "Casper the Ghost," "Lassie," "Mr. Magoo" and "Richie Rich." It's around $155 million.

The DreamWorks chief executive, Jeffrey Katzenberg, always good to have Jeffrey with us on the program, and he joins me from Glendale, California.

One hundred fifty-five million dollars, Jeffrey, but this is a classic case, isn't it, of content remains king?

JEFFREY KATZENBERG, CEO, DREAMWORKS: It is, Richard, well put as always. This is a remarkable, unique library of 450 very high-quality characters and stories and over 600 ham (ph) hours of television programming. It's just a remarkable library, and we think it has enormous potential for us.

QUEST: So how do you and where do you start to amortize that? Because I notice from the release that it's almost going to be cash positive within a year or two. So are you going to start squeezing the orange to get the juice out fast?

KATZENBERG: Well, we think so. And it comes in many different avenues for us. So to begin with the library itself, we think, just opens itself up to tremendous value. Remember, we've been owned by private equity company. Now we're owned by a creative content company.

So right away, when you look at those characters that you mentioned, and many, many more, we think there are immediate short-term opportunities for us to create new stories, new movies, new television shows, consumer products, digital -- it's kind of a broad list of things that we can delve into.

There are -- the other thing to think about it is that over the last few years, I think that DreamWorks Animation brand has really come into its own. And now to have this library attached to those blockbuster films is another way for us to create some quick value.

QUEST: We are going to follow it closely. We're out of time, late in the program, Jeffrey. Thank you for joining us. And I'm slightly jealous because Richie Rich, as I declared on this program a few weeks ago, Richie Rich was actually my favorite cartoon character. So I look forward --

KATZENBERG: You owe me a visit to Glendale, remember.

QUEST: I do indeed, a visit to Glendale, and you owe me a model of Richie Rich. There's a deal that's -- it's a deal done on this program. Many thanks.

Jeffrey Katzenberg who is in Glendale, California, tonight.

A "Profitable Moment" on the Olympics and stop the wincing (ph) after the break.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment," this morning I tweeted that the idea that a final countdown has begun to the Olympic Games, and it's time for the complainers, the wingers (ph) and the whiners to shut up once and for all. And many of you seem to agree with me.

Well, there's been so much said about traffic jams and public transport, congestion and delays, security and advertising regulations, the city's mayor, Boris Johnson, says these complaints are inevitable, the calm before the storm, a necessary buildup to an event of this magnitude. Well, like it or not, the Games are upon us.

The Olympic lanes have been painted and games lanes in -- I took this picture myself this morning on me phone. Well, it's all here, the athletes. And now it's time to get on with it. I saw the hard work when I arrived at Heathrow this weekend. It took me less than a minute to get through immigration security.

Once the curtain's raised and the starting gun is fired, well, all the sour-faced cynicism disappear, please. Let's concentrate on the finest games yet, and if you've got any more whinging to do, well, you can always email me or tweet me @richardquest. And that is QUEST MEANS BUSINESS for today. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. The news is next.

(MUSIC PLAYING)

QUEST: The headlines at the top of the hour.

Opposition activists say at least 30 people have been killed across Syria this Monday. This video posted online appears to show shellings in Talbiseh in Homs province earlier today. The Syrian foreign ministry said any chemical weapons they have would only be used against foreign attackers.

Meanwhile, news agencies are reporting that Syria has rejected the Arab League's offer to provide a safe exit for President Bashar al-Assad. A Syrian spokesman said the government was sorry that the Arab League had, in their words, descended to this level.

Widespread attacks across Iraq have claimed the lives of at least 82 people. Eight bombings in the oil-rich city of Kirkuk are blamed for five deaths. The deadliest round of blasts came in Taji, north of Baghdad, where 32 people were killed. Some feared the attacks signal a return to sectarian violence.

And the suspect in the Colorado cinema massacre has made his first court appearance. The judge told James Holmes his rights and informed him there wouldn't be any bail for now. Holmes gave little indication that he was paying attention throughout the brief proceedings. Formal charges will be filed next week.

You are up to date with the news at the top of this hour. Now, live from CNN New York, "AMANPOUR."

(MUSIC PLAYING)

END