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QUEST MEANS BUSINESS

Eurozone Unemployment Rate Tops 11 Percent; Deutsche Bank Cuts Jobs; European Stocks Fall; ESM May Up Firepower By Borrowing From ECB; Central Banks' Toolbox; High Expectations May Be Disappointed; Indian Power Outages; Growth Slowing in India; How London Can Translate Being Global Center Post-Olympics to Long-Term Economic Benefit; US President Announces New Sanctions for Iran; Brent Crude Down; Euro Edging Up, Pound Sliding; The Millennials: Turning a Profit; Cash Tags

Aired July 31, 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: It's a case of record unemployment in Europe, and that raised the heat on the central banks of the world.

Powerless. India's blackout hits half a billion people.

And host town turned ghost town. Fears of Olympic chaos kept too many people out of London.

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

Good evening. As Europe's unemployment crisis shows no signs of improving, there are fears that are growing that the bloc's central banker has bitten off more than he can chew.

Last week, Mario Draghi said he'd do whatever it takes to save the euro. He went so far as to say there were no taboo subjects. Well, tonight, we'll look at whether or not Mr. Draghi's got the firepower to do it, or is he destined to disappoint the markets.

If you join me over in the library, you'll see at what sort of a difficult day it has been, and certainly if you look at the economic numbers.

First thing's first. Eurozone unemployment. It's now at a euro- record high of 11.2 percent. Within this, there are great variations, and that is one of the problems in managing the current crisis. You have Spain, of course, with unemployment at 24.8 percent, and youth unemployment at more than 52 percent.

But then you have Austria and the northern countries at 4.5 percent unemployment, with youth unemployment at 8.8 percent. A complete difference between those countries that are in program like Ireland, Portugal, Spain, and Greece, and the northern countries: Germany, Austria, Belgium, and so forth.

After a meeting in Paris today, the leaders of Italy and France said Europe needed action on growth as soon as possible.

(BEGIN VIDEO CLIP)

FRANCOIS HOLLANDE, PRESIDENT OF FRANCE (through translator): We spoke once again of our willingness to do everything in our power so that the decisions taken at the end of June at the European Council are applied, that the eurozone be defended, preserved, consolidated, so that we may work on its integrity.

(END VIDEO CLIP)

QUEST: Now that, of course, puts into play this number of unemployment. If that's the eurozone average, Germany's rate, the July rate, 6.8 percent. It's the adjusted figure shows that for eight straight months.

Now, the unadjusted number has risen slightly somewhat. The agency's blaming seasonal factors, which include various things like agriculture, holidays, tourism, and the like.

Deutsche Bank announced job cuts as profits have halved to more than 1900 jobs, mostly outside of Germany. The cost-cutting helped Q2 net profits. It has seen to just $1.5 billion -- from $1.5 to $814 million. And it's blaming the impact of Europe's debt crisis.

If you put all these numbers into the markets and you factor in what we've seen from Mario Draghi, the gains that we saw didn't exactly evaporate today, but we did see the largest losses in the UK which, of course, is on the back of banking shares.

SocGen down 3 percent, that would've been in Paris. RBS down 4 percent, UBS down 5.9 percent. All of which puts us into the perspective, the German newspaper "Zeitung" is reporting that eurozone states are debating giving the European Stability Mechanism, the bailout fund, unlimited firepower. They would do it by allowing it to borrow from the ECB.

Now, the ECB would lend the ESM the money, the ESM would then go and buy the bonds, you get the idea. CNN's Frederik Pleitgen joins me now from Berlin. If they do this, and it is just reports in newspapers, but if they do this, Fred, they would be going through the back door, exactly what the ECB cannot do through the front, which is subsidize government's debts.

FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Exactly, Richard, because that would be it's directly funding the debts of the member nations, which is something that under European treaties, the ECB is not allowed to do.

And there is, of course, one very powerful country that is very much opposed to such a measure, which is essentially giving the ESM a banking license, and that country is this country right here, is Germany.

I was able to speak to the spokesperson of the finance ministry earlier today, and he was saying that so far there have been no debates of giving the ESM a banking license, and he does not believe that there are going to be any debates.

But it does seem as though behind closed doors, there is some talking going on about whether or not this would be a good idea. You were saying earlier that some of the countries that seem to favor such an approach include France, Italy, and Spain.

So, it does appear as though, Richard, and this is very interesting, that Germany seems to be coming more and more isolated as to the firepower that the European Stability Mechanism is going to have.

You recall, Timothy Geithner was here only yesterday. He urged massive action as fast as possible when he met with Germany's finance minister, Wolfgang Schauble. Other governments here in Europe have been urging Germany as well to take more action to try and stabilize the euro.

And certainly, giving the ESM more firepower -- unlimited firepower, as may people will say -- is seen as one of these things. On the other hand, you have Germany's fear of inflation if in fact the ESM and the European Central Bank start giving out money to buy bonds on a massive scale of these ailing countries.

So certainly, the Germans are not in favor of such a measure, but it does seem as though, Richard, the Germans seem to be getting more and more isolated within Europe as to the approach to try and stabilize the euro. Richard?

QUEST: All right, Fred, but Mrs. Merkel, can she withstand the force if she's isolated?

PLEITGEN: Well, that is a very good question, certainly also a very difficult one. And it might seem as though Angela Merkel is on very -- on very hollow ground, if you will. On the one hand, if the economy here in Germany does worse, you will see politicians on all parties or of all parties start to talk more and more about Germany taking an even tougher stance than it already has.

There are parties within the governing coalition that don't believe that countries like Greece should receive any additional money, that don't believe that Germany should support other European countries if, in fact, other countries do need a bailout as well.

So, if the German economy does worse, you'll probably see Germany take a tougher stance, and we just noticed, unemployment has gone up slightly, even though the employment sector still seems to be very robust. We have Deutsche Bank also cutting jobs, as well.

So, the weaker Germany gets, the tougher Angela Merkel's stance will be. Will she be able to withstand pressure from America and other European countries? Only time will tell, but at this point in time, it doesn't seem as though the German government is changing its approach, Richard.

QUEST: Fred Pleitgen who is in Berlin for us tonight. The US Federal Reserve has kicked off its policy meeting today, and it is a two-day meeting. We'll get the results and bring them to you obviously roughly this time tomorrow.

But if you take a look and join me at the super screen, this is really what this whole battle is now about, this whole discussion. This is the toolbox for the Fed and for the ECB. And what really is behind it is what they can do.

Starting with the Fed, the Fed has really three major tools at its disposal. It can have another bout of Quantitative Easing, QE3, but there are some serious questions about the efficacy of buying more US treasuries and what that does for the transmission mechanism.

The discount rate can be lowered, but the discount rate is the rate at the discount window, and it's already pretty low, and not too many banks are using it anyway, so that has marginal effect. And you've got jawboning. You can talk the market into believing confidence.

A similar sort of operation at the ECB. They can cut rates, but the rates are already just about at zero and, indeed, in some European countries they are negative.

They could do another of those three-year all-you-can-eat shovel all the money out the window as fast as you can into the banks, the LTRO, long- term refinancing operation. That greatly helped Spain earlier on.

And of course, it can do its own version of QE when it can go bond buying in the secondary market, or it can, of course, have some variation thereof. So, that's the toolbox that you see. Austan Goolsbee, the former economic advisor to President Obama says whatever happens, whichever toolbox is uses, action may not be enough.

(BEGIN VIDEO CLIP)

AUSTAN GOOLSBEE, UNIVERSITY OF CHICAGO BOOTH SCHOOL OF BUSINESS: Even them all acting together, you've basically got the problem that the interest rate's already zero percent. So -- in the US.

And so, when the interest rate is that low, they've tried forms of quantitative easing, they do the twist, they try a bunch of things like that. They're going the right direction, they're just not that effective the way they normally would be in a normal environment.

And then, when you have on top of it kind of a -- somebody stepping on the go pedal, somebody stepping on the brake at a lot of the major central banks, it basically confuses the message and lessens its impact.

(END VIDEO CLIP)

QUEST: So, that's the situation we are in at the moment. Both central banks later this week will be making their decisions, and the markets are expecting something. And that's the core of it. Ken Wattret is the chief eurozone economist with BNP Paribas. He points out, perhaps rightly, that whatever they announce, the markets are in for a disappointment.

(BEGIN VIDEOTAPE)

KEN WATTRET, CHIEF EUROZONE ECONOMIST, BNP PARIBAS: There seems to be a see change, a recognition that something needs to be done. My concern is that perhaps expectations have run ahead of themselves and that people are expecting the ECB to deliver something radical at the policy meeting later this week.

I think the ECB will suggest that they're moving towards some unconventional measures to try and resolve some of the stresses in markets, but I wonder whether expectations in the very short run might be disappointed.

QUEST: What can and do you think is on the table for central banks to do. And by this, I suppose I'm asking, do you see any form of coordinated action between, say, the Fed, the ECB, the BOE, the Bank of Japan?

WATTRET: I think the theory is the same, that something needs to be done to address the malaise in their economies and also the tensions in financial markets. But I think the response may be different, depending on the central bank.

QUEST: If we look at the ECB, we know that there's the possibility of bond-buying with the SMP, we've got the possibility of more three-year, basically all-you-can-eat money, and you've got the possibility of cutting interest rates, even though they're already virtually in the basement anyway. Which do you think they're going to do?

WATTRET: Well, my worry is that none of those are particularly radical. We've seen the longer-term loans to banks. I think there's a good likelihood of more of that, but I'm not sure that's going to make a huge amount of difference.

The cut in interest rates is symbolic rather than anything in practical terms to change the cost of borrowing in the economy. And the SMP purchases, the bond purchases through that vehicle, are likely to remain limited and rather small in scale.

And therefore, my feeling is markets are now looking for something bigger. What the hope would be is that the ESFS and the ESM, the rescue facilities, can also buy sovereign debt and have a much bigger impact on market sentiment than we've seen so far. But that requires a political agreement, and that's moving less quickly, perhaps, than a discussion at the ECB.

QUEST: The one thing that I've realized in our discussion, Ken, is that we have started with great hope and promise, and within about three minutes, we've descended into exactly the swamp of politics and economics that's made this crisis so difficult to deal with.

Now, if we are -- if you and I have managed to do this in three minutes, by the end of the week, the markets could be seriously disappointed in the response from policy-makers.

WATTRET: My senses of that is definitely the risk in the short term. I do think there is a mood change in the euro area to try and do more about the underlying causes of the crisis, but maybe the expectations have moved forward too quickly on the back of what Mr. Draghi said in London a few days ago.

I think there is a desire to consider other options, but putting the agreement in place is proving rather difficult. There are a large number of countries involved in ECB decision-making, and a very large number of countries also involved in the political decision-making, and that makes it very difficult to reach a consensus quickly.

It inevitably takes more time, and that's why we've had this tendency for disappointment at summit meetings, at policy junctures, and so on.

(END VIDEOTAPE)

QUEST: Ken Wattret talking to me, putting it into plain English as we continue to work out what will happen with the central banks this week. We'll of course follow that up after the next few days.

Coming up next, the lights went out in India and half the population lost power. Supply failed in 19 states.

And later in the hour, one of our Millennials looks at turning her passion into profit.

(BEGIN VIDEO CLIP)

MILISUTHANDO BONGELA, FASHION BLOGGER: Now we are looking at a new frontier where hopefully we're going to change it up a little bit, or actually just restructure the whole thing so that we still make really nice clothes, we still keep our customers, but also we've got some proper money in our pockets.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

QUEST: India has been hit by its second major blackout in as many days. It trapped miners underground, although they were all safe. It stranded commuters, and it crippled businesses. Half the population, 600 million people, were left without power.

Here, you can see India's massive and aging electrical grid. Power distribution is divided into five regions, three of which have been affected so far. When the northern grid went down on Monday, the region took power from the eastern grid.

Well, you can see how this happened. The domino theory followed on. The extra demand took down the eastern and the northeastern grid with it, as well. You can get a sorry state.

The blackout is putting more strain on India's slowing economy. Today, the Reserve Bank of India cut its growth forecast for the year by nearly 1 percent. The RBI also raised its inflation outlook. CNN's Harmeet Singh is in New Delhi and joins me now.

When we look at this -- what happened today, is this just a case of aging infrastructure, which finally couldn't handle the toll and burden upon it?

HARMEET SINGH, CNN INTERNATIONAL CORRESPONDENT: Richard, India's infrastructure problems are enormous. First of all, with what we see here in this particular case is that there is an energy shortfall of some 9 percent annually, and India is struggling to meet that demand.

But this outage has once again exposed the urgency to reform power sector, and Indian prime minister Manmohan Singh is seeking $400 billion in the next five years to fix the power sector, to ease the burden. This, in fact, outage as reinforced the need to do that. That's number one.

When we talk about infrastructure problems here in India, we have seen several projects being stalled because of local opposition, and that because of archaic laws, analysts say, and that because of the opposition stance when we see that rule India, especially. It's on the boil when it comes to land acquisition. That's a major, major issue here in this part of the world. Richard?

QUEST: But the thing here, though, is, Harmeet, for a country, an emerging economy that is aspiring obviously for great growth, one of the BRICs, this is extremely worrying for businesses, who will be looking to invest and saying if they can't guarantee power, then there's something seriously wrong.

SINGH: Yes, we have been speaking to economists today, we spoke to them, and they said this indeed has hurt India's pride, which seeks to emerge as an economic power in the world to reckon with. We have seen this outage happen in a decade.

But Indians are no strangers to power cuts. Power cuts happen 7 to 8 hours a day in many parts of India, and more -- and many other parts of India still not electrified. So, that's one thing.

But yes, investors, big or small companies, most of them now have to make an additional investment on the back of plans to have power backup. This, indeed, is an additional burden on them, which is a cause of worry for most of them.

QUEST: Harmeet, many thanks indeed. Harmeet speaking late night for you, giving a report for you tonight in Delhi. Thank you for joining us on that.

Now, before this latest blackout, Jim O'Neill of Goldman Sachs told me it was time for India to sort itself out -- you heard him on last night's program -- and realize its economic potential.

Jim, of course, is the man who coined the term "BRIC nations." On Monday, he said the country's next moves would have a major effect on the global economy.

(BEGIN VIDEOTAPE)

JIM O'NEILL, CHAIRMAN, GOLDMAN SACHS ASSET MANAGEMENT: For the world, what's going on in these other countries, the four -- the other two BRICs and those two, is actually more important for the world than what's going on in the US, and I'm fond of seeing that between them in 2011, the BRIC countries created $2.2 trillion of GDP, the same as the size of Italy.

So, it is quite disturbing that Brazil and India have slowed down so much. And obviously, there's this huge debate going on about China's slowdown. And what happens with these guys is a lot more important for all of us including, by the way, countries in Europe that are exporting to the world.

QUEST: So, should we -- well, we are concerned. You're concerned, that means we should be concerned. What do they need to do? And I know it's not a one-size-fits-all.

O'NEILL: No, no, it's not a one-size-fits-all. I think in Brazil, they're actually doing quite a few important things. Their big problem, at least the one that they can control, as related to the very high level of real interest rates, the ridiculously over-valued level of the real.

And this monetary authority supported by the government is deliberately trying to bring rates down quite aggressively and stop the real as being attractive. That is positive.

In India, frankly, they need to wake up and deliver some of the talk. In India's case, conceptually, it's easy. Let foreign investors invest in important parts of their country and sectors of their industry. If they do that, a lot of India's problems would disappear in a heartbeat.

QUEST: Finally, I know you have been watching the Olympics and enjoying them as much as the rest of us here --

O'NEILL: Fantastic.

QUEST: London is also, you were telling me, the center of the BRIC. So maybe they should be a member of the BRICs.

O'NEILL: Well, I've argued for a while that London is the natural BRIC capital of the world. In the past week, as we built up to the events of Friday night, as I've been going across town to various meetings, it feels like it is, and it's a very special moment in London's development and history.

And the whole debate about the cost and the benefits of hosting Olympic Games, I've historically sided with those that thing the legacy cost is bigger than the benefit, but because of this special moment of globalization and the emergence of these characters, if London can translate this into, "Hey, we're open for business, including doing things with all of you guys," it is a fantastic legacy for London.

(END VIDEOTAPE)

QUEST: Jim O'Neill, Goldman Sachs. India, Brazil, and the role of Britain in with the BRICs. News just in --

(RINGS BELL)

QUEST: Barack Obama has announced new sanctions against Iran's oil sector, warning that Tehran faces growing consequences for refusing to answer international questions about its nuclear programs.

The price of Brent crude -- not entirely certain that it's related to that -- down 1 percent at $105.80 a barrel. One might have expected to see that rise with these new sanctions and to tighten supply. Probably, I suspect, that has more to do on the question of the demand side of the equation. But Brent at 105.8.

Now a Currency Conundrum -- now this one, this is a good one. No, it is, I promise you. Why does this Macau bank note have the 2008 Beijing Olympic logo on it? A, because Macau hosted some of the events? B, to show Macau's support for China? Or C, it was issued by China for Macau? The answer later in the program.

Now, the rates. The euro is edging up on expectations the ECB will act to ease the debt crisis. The currency gained around a third of a percent against the dollar. Sterling is sliding, the yen is almost unchanged. Those are the rates --

(RINGS BELL)

QUEST: -- this is the break.

(COMMERCIAL BREAK)

QUEST: Our Millennial, Milli Bongela, has the drive and the initiative to be her own boss. That much we have already discovered, as she is one of our Millennials. When she started her own clothing retail company, she showed true Millennial spirit and determination.

Making that first bold move is one thing. She's now discovering actually making money is quite another. Being Millennial is no guarantee of profit.

(BEGIN VIDEOTAPE)

UNIDENTIFIED CORRESPONDENT (voice-over): They're young and confident, educated and ambitious. Born in the 1980s, they're the new generation entering the workforce, and their thirst for success knows no bounds. They're The Millennials.

Previously on The Millennials, in Johannesburg, balancing your working hours, Milli opened up about stress and burn-out.

BONGELA: I just felt inundated with helplessness. I just didn't know what to do for myself.

UNIDENTIFIED CORRESPONDENT: Today, Milli isn't alone in dealing with her problems. She's seeking financial help from an expert.

BONGELA: Our money goes back to the designers and paying expenses, and we don't actually make a profit.

UNIDENTIFIED CORRESPONDENT: She's meeting her financial advisor.

UNIDENTIFIED FEMALE: The budget figure that you've given me of sort of like $25,000 also seems a bit low.

UNIDENTIFIED CORRESPONDENT: Looking for ways to find some more cash for a new clothes range for her MeMeMe store.

BONGELA: We've come to realize that our business model was a great way to start a business, but it's only ever going to keep just floating above water, not necessarily making some serious cash.

UNIDENTIFIED CORRESPONDENT: Having looked at the spreadsheet, her advisor has some concerns.

UNIDENTIFIED FEMALE: I'm not really sure how many items of clothing you're aiming to make from this budget, and sort of like what revenue you're hoping to generate and what profits you're going to make, and ultimately if it's worth your while to go through all those efforts if at the end of the day, you're not going to make anything from it.

UNIDENTIFIED CORRESPONDENT: Milli admits that she's been too focused on the designs rather than the bottom line. Now, she needs to refocus.

BONGELA: We have realized that the business model that we inherited from the Capetown store is only good to keep us above water. Now, we are looking at a new frontier where hopefully we're going to change it up a little bit, or actually just restructure the whole thing so that we still make really nice clothes, we still keep our customers, but also we've got some proper money in our pockets.

UNIDENTIFIED CORRESPONDENT: One option was to get a loan from a bank, but that didn't get the go-ahead.

BONGELA: I approached the bank last week just to go and gauge what kind of response they'd give someone like me. And they basically said they'd love to help, but they need 80 percent value of the collateral. And in collateral, they mean 80 percent of the value of the money that we're asking for. And I thought, well, if I had that, I wouldn't really be coming to you.

UNIDENTIFIED CORRESPONDENT: Now, she's back to square one.

BONGELA: We're now planning for through another company, and failing which, we will find another avenue.

UNIDENTIFIED CORRESPONDENT: In the weeks ahead, we'll find out if Milli can find funding from elsewhere.

Next week on The Millennials, Sam Bompas and Harry Parr hitch their decisions to a big auto company, but will it like their designs? Find out, only on The Millennials.

(END VIDEOTAPE)

QUEST: And the Millennial conversation is yours online using the hash tag #cnnmills. And while we're talking about hash tags and the like, Twitter has unveiled a new twist on the hash tag line. It's called a cash tag, and that's what it is.

You literally do the dollar sign and whatever it is, and it lets you see financial news more easily by searching for a ticker symbol like Google or APPL. I actually have already tried it, and it does actually work, cash tag $GE, I tried, and it brings up all the stuff on there.

And staying Millennial matters, Hotmail, the webmail service from Microsoft, is getting a major change. Microsoft is giving it a new look. It's going to rebrand it for new people, call it outlook.com. Good-bye Hotmail, hello Outlook. Existing users keep Hotmail addresses, new losers -- users will be @outlook.com. I think you get the idea on that.

Coming up after the break, a deal with the Red Devils. The Manchester United IPO is taking shape. The money's not going where fans had hoped. It's going into the back pocket. In a moment.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and here, on this network, the news always comes first.

The power is back on in India after half the population were left in the dark as three regional power grids collapsed. Trains, hospitals, airports, the lot, all were affected . The blackout was the second in as many days.

A Syrian opposition group says rebels have seized two police stations in Aleppo and killed at least 40 police officers. This video appears to show rebels touring one of those police stations.

Meanwhile, on the outskirts of the city, state TV says government troops have destroyed nine armored vehicles with, as they call it, terrorists inside.

On day four of the Olympics, France's Jo-Wilfried Tsonga won a mammoth final set against Canada's Milos Raonic in 25 games to 23. That made it the longest tennis match in Olympics history.

Elsewhere, the United States won gold in the women's artistic gymnastics final. Russia took silver. Rumania took the bronze.

In an hour's time, the Chinese swimmer Yi Shiwen will race in the 200- meter individual medley final. Yi has been forced to deny claims of doping after setting several records at this year's games.

(MUSIC PLAYING)

QUEST: The Q25 may be over and it certainly showed a situation where the reds were more than the golds. But earnings season is still in full swing and the worrisome results, companies that have very specific issues in some cases reported today. BP reported a 96 percent fall in adjusted replacement cost profit -- very complicated.

The British company says it was $2 billion to $5 billion write-down of its U.S. shale gas assets. That's because of the way fracking and shale gas has -- the price has fallen and everybody suffered from that. The long-term effects of Deepwater Horizon. The results significantly worse than expected. BP down more than 4 percent.

UBS world results were worse than expected. Switzerland's largest bank falling, reporting a 58 percent fall in net profit, blaming the Facebook IPO for its lost in the investment banking division. The bank's taking legal action against Nasdaq over its handling, UBS down 5.8 percent.

Panasonic had good results, reporting a first net profit in six quarters, the turnaround due to a restructuring of its ailing television business.

And U.S. stocks, well, U.S. stocks themselves, they are treading water. Ahead of the results of the Fed meeting which kicked off on today. Alison Kosik is in New York, joins me now.

So you saw the Q25 and you saw what was happening with the results. And companies again and again telling us, Alison, that they can't get traction.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. And the economy is seeing the same fate right now as well. I mean, you look at how the jobs market is doing just here in the U.S. And this is one of the reasons why. You've got the market treading water today, with investors asking will they or won't they.

Will the Fed do something tomorrow when it comes out with its rate decision, meaning do something, introduce some sort of stimulus into the economy. Or will it not do anything? That is really what the market's focused on today.

You know, there are a couple of economic reports that are kind of distracting investors a bit. One is on consumer spending, showing it came in flat in June. Personal incomes rose a half a percent. But you look at consumer spending.

That's actually something the Fed is focused on, because it's a major reason why economic growth has slowed in the second quarter here in the U.S., and some analysts are worried about the looming fiscal cliff that that's keeping consumers from spending more. So these host of worries, weighing on the market, everything sitting on the Fed's shoulders, waiting for them to announce what they're going to announce.

QUEST: Right. But let's talk about the market and what's weighing on the market's shoulders. We're at the end of the month, and we like to take a bit of stock here.

If we look, we've had such a large range, Alison, this 500-point range, some pretty down, but we're ending the month, though, better than we began, even though we've had that volatility. This last run-up in the last week or so. Can we attribute that run-up to the earnings season?

KOSIK: You know, you could. You know, you look at -- and you look at how the major averages did, the Dow, the S&P, they were on track for more than 11/2 percent gain, as we headed into today's session, the Nasdaq came in slightly higher, but not by much.

You really saw the Dow recover from a sizable dip in the middle of the month, and then it kind of regained 13,000 last week, and it's holding onto that as we speak. Even as we see the Dow dip, you know, a good portion of that, yes, is earnings.

And also, you know what, despite all the uncertainty and the worries about Europe and the slowing economic growth, stocks are still holding their own. Companies' shares are still holding their own and climbing higher, Richard.

QUEST: Alison, stay where you are just one moment . Let's talk about Manchester United. We now know how much the shares in Man. U. will cost when they list on the New York Stock Exchange or we know the opening price will be somewhere between 16 and 20. That's the range at the moment. It will value Man. U. at around $3 billion. That's a total valuation.

But only 10 percent is going to be floated off under the symbol MANU. That's the ticker symbol that they will be used to -- using. The proceeds were meant to go toward servicing the club's debt, which has grown to hundreds of millions of dollars after the LBO by the Glazers.

Now it's revealed -- here's the interesting bit. Half the proceeds go instead straight to the Glazers. So half the proceeds go to the Glazers, half will go to the club. The club already will have wind of this float a very complicated 10:1 ratio for powerful shares, the B class, versus the A class.

Alison's in New York. We know this float failed in En Grand (ph) or didn't get off the ground. Same in Singapore. It looks like it's happening in New York. But the market, frankly, the word I hear is that this is a -- it's a dog of an IPO.

KOSIK: Oh, yes. I mean, there's a lot of skepticism as investors approach this IPO. You know, you look at, if history is any guide, you look at what happened with the teams, the sports outfit that have been publicly traded in the past.

And you know what? They have not been great investments. You look at the stocks by the Boston Celtics, the Cleveland Indians, the Florida Panthers. They all performed badly during their brief runs in public markets, plus -- and you mentioned it, the fact that these new owners are going to be using the money to raise -- to raise money to pay off debt.

So, yes, I mean, there's a lot of skepticism as we head into this. And you have to remember, the fans aren't too thrilled with this stock being listed here at NYSE instead of in London.

QUEST: So, Alison, many thanks. Alison Kosik joining, there we have MANU, a company which will be registered in the Caymans, or at least -- will be registered offshore, traded on New York, plays in Manchester, with funds all over the world. Oh, and the Glazers will still have effective control. But the IPO happens at the beginning of August.

Coming up next, Spain's jobless rate rises to a Eurozone height. Some women are selling all they can for extra cash, and I mean literally all they can, even parts of their own body. QUEST MEANS BUSINESS (inaudible).

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: Today's Eurozone employment figures confirm Spain is the highest jobless rate in the block, almost a quarter of Spaniards are without work. With the situation becoming increasingly desperate, some women are turning to very personal means of making ends meet, as Isa Soares reports.

(BEGIN VIDEO CLIP)

ISA SOARES, CNN CORRESPONDENT (voice-over): This female donor doesn't want to be identified for fear of being stigmatized. She's here at the Tambre Clinic in central Madrid to donate her eggs, a process she's been through four times before.

UNIDENTIFIED FEMALE (through translator): The first donation I made, when I came to the clinic, I was accompanied by my mother.

SOARES (voice-over): Today, she's come alone. She knows that while donating will help others start a family, it will also help her family survive financially.

UNIDENTIFIED FEMALE (through translator): I work at a house, I also do manicures and I work as a cleaner.

SOARES (voice-over): Her husband works as a taxi driver, but the economic crisis here in Spain has severely impacted their income. So she made a decision to begin donating her eggs for cash, a process that requires a series of hormone injections and the surgical removal of the eggs.

UNIDENTIFIED FEMALE (through translator): Once I made two donations, and I got 3,000 euros.

SOARES: Women receive up to 1,000 euros per donation, but the process is long, painful and carries risks.

Once accepted as donors, men can give sperm once a week over a period of three months and they'll receive 50 euros every time.

UNIDENTIFIED FEMALE (voice-over): When you don't have enough money, you take the donation money and you pay all the bills.

SOARES (voice-over): But this is her fifth donation and it will be her last.

UNIDENTIFIED FEMALE (voice-over): They only recommend a maximum of six donations, so it does not affect your health.

SOARES (voice-over): Dr. Rocio Nunez says she's been surprised by the number of donors walking into her clinic; however, the industry is closely regulated, so they don't take everyone who comes through the door. Apart from physical testing, potential donors must also undergo thorough psychological evaluations.

DR. ROCIO NUNEZ, TAMBRE CLINIC: The number of donors increased because there are more people that need money to survive.

SOARES (voice-over): According to the body that monitors reproduction clinics in Spain, in the last year alone, there's been an almost 30 percent increase in egg and sperm donations, and once finished here, some go elsewhere, selling their hair or even breast milk.

Either way you look at it, look closer. These are signs of hardship, desperation and need -- Isa Soares, CNN, Madrid.

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QUEST: More QUEST MEANS BUSINESS after the break.

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QUEST (voice-over): The answer on the "Currency Conundrum," why does this Macau banknote have the 2008 Beijing Olympics on it?

The answer is, C, Portugal handed Macau back to China in '99, although the Banco Nacional Ultramarino currency is still legal tender, China flexed its muscles and issued 4 million 20-pataca banknotes commemorating the 2008 Beijing Olympics. I knew it had to be something like that, but I didn't quite get C.

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QUEST: London businesses were told to expect a manic Olympic Games. Instead, theaters and hoteliers say bookings are down and the local breweries waiting for the expected surge of drinkers and orders. Some parts of London feel eerily quiet, but they might commute a couple of stops on the Bakerloo line is going as smooth as it's ever gone on a quiet day.

To find out more, we sent Jim Boulden to roam the empty streets in search of the so-called Olympic effect.

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JIM BOULDEN, CNN CORRESPONDENT: It's the height of summer, and the Olympics are on. But something's going on. West London is relatively empty. Shops are complaining, so are restaurants. It's not just the weather. So what's going on?

JACE TYRRELL, NEW WEST END COMMONS: A lot of Londoners have heeded the advice. They've stayed away from central London. obviously got the spectators here, the Olympic family here, and they're starting to spend. So quieter than what we would hope for; not a surprise in terms of what we think it going to happen at the Olympics.

And actually, last couple of days, we have seen more spending come through. I think we need to change the message now. I think we didn't know what this beat was going to be like (inaudible) for here.

There was a lot of advice, you know, stay off the public network. You can't change your patterns. I think it's working so well that some would argue even better than what it normally is in London, actually, we are very much open to everyone.

BOULDEN: Does that mean I could get reservations at restaurants that would normally take a week or a month?

TYRRELL: Some of the restaurants maybe. Not just the higher ones. Some of the ones that are quite tough to get into and I was in the other night in one of them. You can call up. Normally a week, two, three weeks to get a table, you can get in right in there.

UNIDENTIFIED MALE: Actually, we were at a breakfast place just now, and the -- it was highly recommended. We waited 10 minutes and then we sat down. So I don't know if that's typical or not, but it was a good place.

BOULDEN (voice-over): One restaurant owner told me her takings are down 30-50 percent over the weekend. And she spent extra money to make sure that she could get deliveries overnight because the restaurateurs were warned there would be too much traffic to get normal deliveries during the day. And that has not turned out to be the case.

UNIDENTIFIED FEMALE: It was so quiet the last weekend. And we actually don't understand why we were expecting at least double of the people and just check the report and it's actually off.

UNIDENTIFIED FEMALE: We have been quite quiet at the moment. On (inaudible) Street, you know, there's not a lot of people about. We open until 8:00 and 10:00 at the weekends. And we're not getting the customer in through the door, which is a bit of a shame, because considering we are doing lots of lovely promotions for the Olympics.

BOULDEN: So the message is the West End is open for business. So if you're here in London for the Games, come enjoy the shops and the pubs -- Jim Boulden, CNN, London.

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QUEST: Whereupon Jim Boulden immediately disappeared off to have a lie-down with one of those drinks, since he was battling the crowds.

The weather now and the Olympics.

Jennifer, I wasn't too concerned this morning when I saw the rain because I think it's just a little bit of one of those things we're going to get (inaudible) --

JENNIFER DELGADO, AMS METEOROLOGIST: Right.

QUEST: -- spot of showers, as the two weeks goes through. This is London and London has rain.

DELGADO: That's right. Absolutely. You know what, and for tomorrow, Richard, the weather's actually looking a bit better out there. So I think you'll see less of the showers out there when you wake up in the morning. And as Richard said, you know, the rain started off this morning. You can see on the radar.

And we said that yesterday. You were going to see a wet start, but the bulk of the rainfall has been all the way over towards the west. Of course, affecting parts of Ireland, but what is in store for tomorrow?

Well, as we take you through the clock, we go through Tuesday. We'll keep it dry throughout the evening hours. And then as we go through Wednesday, as well as into Thursday, really not seeing much green showing up on this.

And that is good news. But it doesn't not mean you won't still see a chance for an isolated shower because, as Richard said, he gave the disclaimer. You can always see a few showers out there. For Wednesday, high of 22 degrees. We're going to keep you dry.

And Thursday as well as into Friday, we're talking about a 20 percent chance for rainfall out there. High temperatures generally right around 20 degrees, Richard.

QUEST: If you don't mind the odd temp, with the odd little shower, it's when you get the massive downpour --

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DELGADO: Downpour.

QUEST: -- during the Diamond Jubilee.

DELGADO: (Inaudible) rainfall.

QUEST: Yes, that's (inaudible). Now, listen, talking about (inaudible) rains, although there aren't there at the moment, let's just go to India at the moment.

These power cuts, you know, I don't know the reason why the grids have -- the electric grids should suddenly be under enormous pressure in India, the electronic grids. Is there any meteorological reason why they're under pressure at the moment?

DELGADO: Well, certainly. Yes, you know, we really do believe there is a tie to that, because you know, every year, the monsoonal rain is so vital to the area, for the crops, for the hydroelectric power. Well, as I show you on the satellite imagery, you're thinking, it doesn't look that bad out there. But typically, we see a lot more downpours coming down.

We've literally seen that up towards the northeastern part of India. But the problem is we have seen a deficiency with the monsoonal rainfall down to about 20 percent. So how does this affect the power industry? Well ,when we show you this, when you have the rain around, this provides relief from the extreme heat.

We've seen temperatures usually climbing to right around the upper 30s as well as into the mid-40s. Well, we don't have the rain around to cool things off. That puts a strain on the power industry. But it's also putting a strain for the irrigation, and that leads to a ripple effect. And how does affect things? Well, now we're hearing a report that 600 million people were without power.

And we really believe this has to do with this lack of rainfall, at 20 percent, of course, this is going to put a big, big, you know, strain on the power industry. And people are going to try to be cooling off because they don't have the rain to cool the buildings off as well as just to basically clear out the temperatures.

QUEST: So to interrupt you there briefly, so it's hotter because the monsoon is taking away the temperature.

DELGADO: Absolutely.

QUEST: And the power supply is more strained because hydroelectric and others aren't providing enough --

DELGADO: They're going to have to water --

QUEST: -- things. So it's what I think you in America would call a double whammy.

DELGADO: It is a double whammy. It's almost -- it's just like an equation. You really can kind of see the ripple effect.

QUEST: All right.

DELGADO: Of not having one part.

QUEST: Jennifer, thank you --

DELGADO: That'll ring your bell.

QUEST: -- Jennifer Delgado, all right.

The market (inaudible) to remind you where we finished on the markets in Europe at this hour. When all was said and done, Europe was mainly done. The largest losses in the London FTSE as a result of the banking stocks were up. (Inaudible) was down 3.6 percent.

And RBS (ph) down 3.8 percent. To New York and the Dow Jones which is trading down 16.4. The question is whether or not 13,000, which has been - - we've had a real difficulty trying to get to that limit during the course of July.

We've got it; it's been held. We're now at nearly the highs of the month, 13,075 was the height of the month. The question is whether it holds it in the days ahead. When we come back in a moment, a "Profitable Moment."

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QUEST: So the prospects were dire and the warnings were severe but, in the end, it's all turned out to be rather much of a damp squib. I'm not talking about the sport. I'm talking about the traffic, the transport, the problems.

(Inaudible), it's all rather genteel at the moment. The predictions of Armageddon haven't come true yet. If you look at London, the buses and the taxis are sailing smoothly down eerily quiet streets. The Olympic action may be frenetic, but the roads are not. Even my commute here for work, just two stops on the Bakerloo line is a dream. I even managed to get a seat.

Now it is early days and we certainly don't want to get ahead of ourselves. But it does seem that a combination of good common sense and perhaps some people staying away, unfortunately, might have done the trick. But it is early days.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. (Inaudible) London so you very well could come on over. Whatever you're up to in the hours ahead, I hope it's profitable. The news is next.

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QUEST: The headlines: the power is on back in India. Half of the population were left in the dark when three regional power grids collapsed. Trains, hospitals and airports have all been affected . The blackout was the second in as many days.

A Syrian opposition group says rebels have seized two police stations in Aleppo and killed at least 40 police officers. This video appears to show rebels touring one of those police stations.

Meanwhile, on the outskirts of the city, state TV says government troops destroyed nine armored vehicles "with terrorists inside," in their words.

U.S. presidential candidate Mitt Romney's finished his overseas tour in Poland. His campaign hoped it would show the candidate's foreign policy prowess, instead being overshadowed by (inaudible) gaffes, such as questioning the readiness of the Olympic Games.

On day four, the United States has won gold in the women's artistic gymnastics final. Russia took silver. Rumania took bronze. In the past few minutes, South Africa's Chad le Clos beat Michael Phelps in the gold medal in the men's 200-meter butterfly. The U.S. is now (inaudible) China in terms of total medals awarded. (Inaudible) in the hours ahead on the Olympics.

And those are the top stories. You are up to date. Now we take you from London to New York live and "AMANPOUR."

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