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Apple Shares Reach $700; Apple's Year of Milestones; Intel Inside Motorola; Mobile Market; FedEx Lowers Forecast; Controversial Comments by Mitt Romney Caught on Tape; Pound Flat, Euro Down; Designer Knits Fashion

Aired September 18, 2012 - 14:00   ET


NINA DOS SANTOS, HOST: A strong reception. iPhone helps push Apple sales past -- shares past the $700 mark for the first time ever.

Mitt's slip caught on tape. The Republican candidate says that half of America's voters act like victims.

And designer Mark Fast shows us what it takes to launch a collection at the London Fashion Week.

Hello, I'm Nina Dos Santos and this is QUEST MEANS BUSINESS.

Good evening. Well, days after Apple unveiled its latest model, the iPhone 5, its shares have breached that all-important $700 mark. This means it's a new record for a company that's seen literally a whole year full of milestones.

Just last month, let's remind you that Apple yet again became the most valuable company in history as its market value rose above that $619 billion level that Microsoft set all the way back in 1999. And today, Apple is worth nearly $650 billion and rising, it seems.

Maribel Aber is standing by at the NASDAQ to put all of this into context for us. So, Maribel, it seems as though Apple just goes from strength to strength. And many investors presumably were expecting it to become the world's most valuable company at some point, right?

MARIBEL ABER, CNNMONEY CORRESPONDENT: Nina, and -- and it keeps going, and going, and going. We don't know where this story's going to end here. It may just be the beginning.

As you said, it finally cracked that $700 stock price threshold this morning. It hit a record high of $701.44 in regular trading. And right now, we'll take a quick look. It's come down just a bit here, Nina, $698.87. And this is before a single phone has even been delivered.

Now that Apple has broken that $700 barrier, the question is, how high will it go? It's come back down, as I said, but time will really tell whether the latest iPhone boost is a bubble or is it a new starting point for Apple?

Apple says that pre-orders of its iPhone 5 topped 2 million in just 24 hours. One analyst thinks that the company will sell around 8 million iPhone 5s this weekend. That's 100 percent growth over iPhone 4S sales on its first weekend.

And Nina, just want to point out here, longer term, it's really going to be about future product releases and if they can penetrate more globally, especially tapping into places like China. Right now, the world's biggest carrier in terms of subscribers, China Mobile, does not have a deal with Apple yet.

So, if China Mobile gets in onboard here, that would open up a huge growth potential for what's already a tech behemoth, 655 million wireless subscribers with China Mobile, there. That's three times more -- or it's three times as many as Verizon Wireless and AT&T Mobility combined, Nina.

DOS SANTOS: The numbers just blind you, don't they? That's an excellent point. Still growth there to go for Apple if it does manage to tap into the world's largest markets.

Now, 2012 has been an incredible year for Apple. It's one when it's seen its share price soar by more than 70 percent. Let's have a look at the trajectory since the start of this year.

This is how it performed between January and February. In fact, back in February, its shares hit $500 a piece. That was for the first time ever.

But what I want to show you here is that it only actually took another month for them to reach another crucial level, $600. And that was just days after the release of the third generation iPad, another all-important Apple product, there.

And in August, Apple's market capitalization -- so, we're talking about its value of its publicly traded shares on the markets grew, to make it the largest market capitalization and most valuable company ever, as shares continued to surge here.

Of course, past August, in the run-up to the release of that latest iPhone, what will be iPhone 5. That particular phone was just unveiled last week, and Apple already says that it's managed to have a pre sale of 2 million phones in just 24 hours.

Just to put that into perspective for you, that is twice as many orders as it saw during the same time period for the previous version the iPhone 4S. And as you can see on the chart here, it has just surpassed that crucial level of $700 a piece.

Well, the shift from desktop computing to tablets and SmartPhones has been a driving factor in companies like Apple's success. Intel is the biggest chip maker for desktop computers, but it has barely managed to make a dent in the mobile world. Now, as Jim Boulden reports, it's teaming up with the Android phone maker Motorola to try and eventually win a slice of the action.


UNIDENTIFIED MALE: Say hello to the full-screen phone.


JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): How do you differentiate your new SmartPhone with the coming onslaught of the iPhone 5? Well, make the point your phone is tougher, faster, with a bigger screen and with a longer-lasting battery than the other guys. That's Motorola's selling point of the new Razr i Android SmartPhone.

JIM WICKS, MOTOROLA: Even with a phone this compact, you get 40 percent larger display than you do with an Apple iPhone 4S and 15 percent larger display than you do with an iPhone 5, all in essentially the same size package.

BOULDEN: You may be forgiven for asking why Motorola bothers. The mobile pioneer has fallen far behind the likes of Samsung and Apple, even far behind Nokia and BlackBerry when it comes to SmartPhone shipments.

But remember, Motorola Mobility is now owned by Google, and the new Razr i has, for the first time, Intel inside: a super-fast 2.0 gigahertz processor. The chip giant, of course, is late into the mobile game.

ERIK REID, INTEL: We've watched with Lenovo, with ZTE, today with Motorola. We've also announced phones on the Orange network. So, we're really building that foundation. For us, this is a big bet. We're committed to it. You should expect more from us to come.

BOULDEN (on camera): It is a big bet, because you -- mobile is where it seems to be most computing's going, and Intel hasn't been there. You've got to get this right.

REID: We do, and we're working really hard at it.

BOULDEN (voice-over): Motorola joins the likes of Nokia and LG in making announcements to launch new phones around that other player in the market.

BOULDEN (on camera): It's still a few days to go before the launch of the iPhone 5, but you have die-hards already lining up in front of the Apple store. It's hard to see this happening for the Motorola Razr i or for the Nokia Lumia.

BOULDEN (voice-over): Nokia and BlackBerry have yet to regain their footing after massive stumbles. Motorola went from a mobile pioneer to an also-ran. But now, it has Intel.

BARRY FOX, "CONSUMER ELECTRONICS DAILY": Now put the two together, it could be a really dynamic combination. And I think it will be great, because it would shake up Apple, it would shake up Samsung.

BOULDEN: The Razr i will go on sale next month in select European and Latin American markets. Motorola won't confirm if or win the new phone will be sold in the United States. But with Christmas coming, it has a shot at least to regain some of its mobile luster.


DOS SANTOS: Jim Boulden's here in our London studio with us, now, and I'm delighted to say he's armed with one of these Motorola Razr i's. Let's have a look at it.

BOULDEN: Well, I'm having a good play with it. It -- we didn't see this before today, but it's obviously got the Android in there, and it's -- let's just say, if you look at it from the iPhone 4, I don't have a 4S or obviously a 5 yet, but you can see it's much, much thinner. This is the Razr from Motorola.

So, they're trying to make the claim they are thinner, longer battery, longer-lasting battery, which is crucial.

DOS SANTOS: How long exactly does the battery last?

BOULDEN: Twenty hours even with use, which they said makes it an all- day phone, not a phone you have to start recharging at 4:00 in the afternoon.

But still, tough as nails, which is what Motorola has been famous for, since it really invented the cell phone. So, they're trying to say they can still have all that Motorola reliability, but in something that they think is better than an iPhone.

DOS SANTOS: Now, obviously, the Android is the crucial thing with this, the operating system, but are we getting to a stage where people get so used to Apple's operating system that they just don't really want to change? Irrespective of the marketing capability of Apple.

BOULDEN: Yes. But that's what the late Steve Jobs did so well, is the ecosystem he created around the Apple, so with your Mac, your iPad, your iPhone, you think to yourself, do I want to go back and think about something else? Do I want to go to a Windows Tile 8 Nokia phone? Do I want to go to an Android operating system?

Well, a lot of people are going to Android. Let's not forget. Samsung Android is a hugely successful phone as well. Motorola is an also- ran player, and they need to get back in the game, and using Intel to do that may just be the way to get them back into the market.

DOS SANTOS: But also, for Intel this is an enormous business opportunity, isn't it?


DOS SANTOS: It gives them one entree into the market as mobile technology that it really missed ten years ago.

BOULDEN: It did. It's extraordinary to think of that, but every one of these companies -- Microsoft came late to the mobile market as well and didn't do very well when it first started trying.

So, Intel has signed up deals with several of these players to try to get these phones to be the ones and to choose the two -- for this two gigahertz phone, try to choose this one over an arm phone that most other makers have out there.

But Intel, if they get this right, then so much of what we're doing is now in the Mobile world, then they will be able to seamlessly move, they hope, into the mobile world without skipping a beat.

DOS SANTOS: Things are obviously heating up in this space, aren't they? We've got the iPhone 5 --


DOS SANTOS: This is a 4, as you were saying before.

BOULDEN: It is a 4.

DOS SANTOS: But when we do get the 5, which apparently is quite a bit lighter, because it must be, that's quite heavy. When eventually that's going to be going on sale later on this week --


DOS SANTOS: -- how is this going to compete? Because obviously, it's a question of marketing as well, isn't it? Having the latest gadget. Doesn't really matter what it does.

BOULDEN: No. But what they're hoping is is that the fact that they had so much work, because obviously Google owns the phone now and owns Motorola and so much work with Intel that the engineering that these companies know how to do very well will make people say, that's a phone I want to test.

Nokia told the same thing. Stephen Elop keeps saying, if you just go into a shop and look at our phone, ignore the iPhone, go in there and try our phone, then people will buy it. The problem is is getting people, as you say, get the marketing to get the people to look at that phone and keep their eye off the other ones.

DOS SANTOS: OK, Jim Boulden here in our London studio. Keep those there, I want to try them out after. Thanks so much for that.

Right. Well, the economic bellwether FedEx has just cut its full year forecasts warning of weak global economic conditions. It's a shock to the markets. Also it's a stock that's down by more than 2 percent as a result. Let's go over to Alison Kosik, who's standing by to put this into context at the New York Stock Exchange.

So, Alison, what's really interesting about FedEx as well is you'd have thought with all these SmartPhones being released, people putting in their pre-orders, they'd be doing pretty well these days.

ALISON KOSIK, CNN CORRESPONDENT: Well, actually, the iPhone 5 should help FedEx, by the way. It's funny that you mention that, but that is the case.

As far as what is hitting the stock today, the shipping company lowered its guidance not just for the current quarter but for the full year, and this is a big concern, especially since FedEx is seen as a bellwether. It's health gives us a great idea of how the broader economy is doing since it ships so many different products to so many different countries.

Now, what FedEx did was point to weakness in the global economy for the showdown -- the slowdown. And it said it would raise prices in some branches of its FedEx Express division by almost 4 percent.

And here's the thing with this. FedEx's report, it comes well after the traditional earnings season, so it could give an indicator of how the next reporting period is going to go, and that begins in about a month. And these results are not a great sign.

But as the "Wall Street Journal" points out, Nina, a lot can happen between then and now, and the Fed's buying the drinks these days anyway. Nina?

DOS SANTOS: OK, Alison Kosik there at the NYSE. Thanks so much for that. And bring us the latest on FedEx's earnings.

Well, up next, the fundraiser which might have harmed Mitt Romney's chances of becoming US president. The Republican candidate was caught on tape saying that nearly half of US voters -- that's right, nearly half of all US voters -- think that they're victims. We'll have more on the uproar that his words have caused after this break.


DOS SANTOS: Mitt Romney is trying to limit the damage cause by comments that he made at a fundraiser, which were caught on tape. In the secretly-filmed video, the Republican presidential candidate was captured making disparaging remarks about Americans who receive government benefits.

Well, the footage has gone viral on the very day that Romney wanted to actually relaunch his campaign. It also comes just one month ahead of those presidential elections. Let's listen in to some of what was said here.


MITT ROMNEY (R), US PRESIDENTIAL CANDIDATE: There are 47 percent of the people who will vote for the president no matter what. All right?

There are 47 percent who are with him who are dependent upon government, who believe that they are victims, who believe that government has the responsibility to care for them, who believe that they're entitled to health care, to food, to housing, to you name it.

But that's -- it's an entitlement, and government should give it to them. And they will vote for this president no matter what. And the president starts off with 48, 49 -- he starts off with a huge number. These are people who pay no income tax.


DOS SANTOS: Joining me now is CNN's Political Director Mark Preston at our Washington Bureau, and he's going to be telling us largely what all of this means and what are the Americans electorates making of this. Mark, surely this will alienate many people, even if he says that the facts that he was stating were correct.

MARK PRESTON, CNN POLITICAL DIRECTOR: Well, Nina, you are correct. And he's correct mathematically that the country probably is divided along those lines, 47-47 and quite frankly, in the middle, that 6 percent will decide the election, and that 6 percent in about 8 states here in the United States are probably going to decide the election.

But the fact that he used such volatile language right there is not political savvy, even though he thought he was saying it to a private fundraiser. At this point, now, what you have is the Romney campaign being taken off message.

They'd rather be talking about the economy, they'd rather be talking about jobs, they'd rather be contrasting Mitt Romney's plans and ideas with Barack Obama's. Instead, though, at every stop, he's going to be asked specifically about these comments, Nina.

DOS SANTOS: Mark, obviously this may come across as condescending for a man who's also had a hard time convincing people that he's an approachable and likable fellow.

PRESTON: He's not a politician. And what's interesting about Mitt Romney is that he's a very successful businessman. He sees things very mechanically. He's a CEO. He sees wins and losses. He's not a touchy- feely person.

We can compare him, say, to Bill Clinton, when Bill Clinton was president, somebody who could feel your pain. Well, Mitt Romney is not somebody who necessarily can feel your pain.

It doesn't mean that he could not be an effective president, doesn't mean that he doesn't have the skills to be president. He just doesn't have that political skills that would necessarily warm up a room or, quite honestly, warm up a voter, should he speak to that person.

DOS SANTOS: Shouldn't he be aiming his eye at Congress, though, instead, because that's what we've seen in the run-up to these presidential elections, people in the United States are just losing confidence with the political system there and the wrangling.

PRESTON: Well, he is, and he's running as a Washington outsider, he's running as the governor -- or former governor of a state. He's running as somebody who says that Washington's broken, but he's got to be very careful because in Washington, Republicans control one half of the Capitol. They control the House of Representatives.

If you're going to be critical of Washington, you're critical of Washington in the macro level. You don't want to get into specifics necessarily, you don't want to be critical of the House Republican leadership. These are your folks.

He is outwardly critical of the Senate, however, because Democrats control the Senate. But Mitt Romney has tried to run as a Washington outsider.

He was successful -- fairly successful throughout the summer when he talked about the economy, but when he's talking about this, when he has the media asking these types of questions regarding these comments, it takes him off message. He can't talk about the economy.

And quite frankly, if he is going to win this election, it's going to be based upon the US economy and him convincing voters that he has a better plan than President Obama, Nina.

DOS SANTOS: Mark Preston, there, CNN's Political Director, thanks so much for that, joining us from Washington.

A Currency Conundrum for you out there, now. The head of the Bundesbank has slammed unlimited bond-buying by central banks. He says it's, quote, "like an emperor giving out sacks of paper money, which only solves the kingdom's problems for a short time."

Here's my question for you well-read people out there. Which work of fiction actually gave him the idea of making that comparison? Was it Goethe's "Faust"? Was it B, William Shakespeare's "Merchant of Venice"? Or C, could it have been "50 Shades of Grey" by that author EL James? We'll have the answer to that later on in the show.

Well, speaking of currencies, the British pound is currently flat against the US dollar. They've pretty much closed to Monday's four-and-a- half-month peak. When it comes to the single currency, the euro is firmly down today due yet again to uncertainty about debt-laden Spain, and the Japanese yen is fairly flat.


DOS SANTOS: It's the last day of the London Fashion Week, and as such the final shows are underway and most of the hard work is over by now.

One of the designers basking in the after-show glory is Mark Fast. His style has taken the world couture by surprise for one reason in particular: as you can see behind me, it's because all of his clothes are knitted. But he's also proved that you can do quite a bit more with a ball of wool than just make your average pair of socks.


MARK FAST, FASHION DESIGNER: It does look a bit silly. But it makes beautiful clothes.

Backstage at the show, that's what I live for. There's such intensity. I'm quite calm backstage, so when people meet me, they think, why are you not stressed? I do stress inside, though.

The whole drama makes it worth it. People yelling at each other, people making scenes. I think it's the most inspiring time of the season.

You see all of your six months' work that you've put so much effort into, and you see your team who's been there beside you the whole way, and you're just really proud.

This moves around the body. And then it creates -- some movement. These are the fringes that I'm going to want to put on her. And the certain yarns that I'm using. This is all quite emotional right now, with this -- with these drawings.

Well, the dress that I'm designing today, it's more has to do with fringe and the extension of the body. I'm attaching fringes -- into the knitwear. So then every move that woman makes and the wind that blows around her will enhance the dress that we're creating.

The thing that most surprises people of the process of knitting is that it actually can create something quite sexy.

It's seeing the transition of yarn into the end result that interests me. I think the fringing's going to really work well.

So, already we've knit one of the sides of the dress here, and all these little notches are going to be fringed, so it'll be an all-in-one fringed piece.

At night, I'll have a sketchpad by my bed and I'll wake up from a dream and have to write it down. Because those creative ideas are like whispers. You can't really hear them, but you know they're there.


DOS SANTOS: Who says the crochet bikini died in the 1970s? Clearly, according to Mark Fast, it's set to make a return.

Now, after the break, a familiar face returns to Czech politics. The former prime minister Jan Fischer joins us live to make his pitch for the presidency.


DOS SANTOS: Hello and welcome back. I'm Nina Dos Santos. These are the main news headlines this hour.

Twisted wreckage is all that remains of a car that a suicide bomber used to kill 12 foreign workers today in Afghanistan. The blast occurred on a highway near Kabul Airport. A militant group linked to the Taliban has claimed responsibility. It says that the blast came in response to the anti-Islam film that has ignited widespread protest around the Arab world, while in Eastern Afghanistan, an Afghan civilian was killed in another suicide attack.

Striking workers at the Lonmin Platinum Mine in South Africa could return to work as soon as Thursday. Their union says that it has now accepted an offer to raise their pay by 22 percent. The workers will still have to approve the deal, though. Last month, the strike turned violent and 44 people were killed at the mine.

Chinese protesters hurled plastic bottles and eggs at the Japanese embassy in Beijing on Tuesday. It was one of numerous protests in cities across China over a group of islands claimed by both China and also Japan. Well, tensions already running high on the anniversary of Japan's invasion of Manchuria back in 1931.

A court has fined a French magazine about $2600 for publishing topless photos of the Duchess of Cambridge. The magazine, "Closer," has been ordered to hand over the original photos to the royal family now. The palace says that William and Catherine, who are currently on an official tour of Tuvalu, welcomed that injunction.

It's a vote that could have a major effect on the future of Europe. The Czech Republic will host its first direct presidential elections in history next January, and one front-runner is the former prime minister, Jan Fischer. He joins us now live from our Washington studios.

Jan Fischer, thanks so much for joining us on QUEST MEANS BUSINESS. First of all, just outline your pitch as to why the Czech people should elect you president.

JAN FISCHER, FORMER CZECH PRIME MINISTER: Thank you very much for inviting -- for inviting me.

And I would say that I have four years (ph) of my campaigning, of my program (ph) which I've presented at the end of the last week, that the strong economy, the rule of law, the increasing corporate responsibility in politics and responsibility of politicians and last, but not least, it's the Czech national interests and the foreign policy concept.

DOS SANTOS: Well, this is what I wanted to come to. When it comes to foreign policy, you're very much against this idea of creating what's called, let's say, a federal Europe, a federal Eurozone, in particular, where the costs are divided and everybody has a say about other people's budgets.

Run us through exactly why you're so against that.

FISCHER: I would say that a concept of the pluralization of Europe is not a major concept, and this is not a concept which would improve and be the -- to heal the troubles with the European Union and Eurozone in facing in time being. Of course, that the solution of the illness of this continent needs to come on action.

But I'm not sure whether -- and I'm not sure whether the fair concept of the pluralization is the best one. We don't have any European identity. We don't have such a thing like the European nation. We have a lot of the similarities in the field of the welfare insurance and so on and so forth.

And the -- some strengthening of the fiscal policy and better control of the fiscal policy, that is something which is to the point where the political federation or federalization of Europe as the concept or idea or vision which I can -- I can barely imagine, in fact.


FISCHER: So I don't see it as a realistic.

DOS SANTOS: OK. So if you are elected, early next year, what will you be saying to your counterparts in Europe when we have yet another endless summit to try and shore up this economy, which, frankly, is in a terrible state and is stuck in a recession? The Eurozone economy and the rest of Europe?

FISCHER: I am aware of the fact that the situation of the European economy is in a good -- in a good -- in a good shape, that's the (inaudible) Europe is a badly ill continent. But I'm -- I would say -- I would say to my colleagues, OK, let's think about the other possibilities, other way out that for the -- than the federization (ph) of Europe actually represents.

And they have to have the short-term measures. We have to have the long-term vision. And we have to have the political program and we have -- we have to have the new way of the political thinking and we have to have the new way how to communicate and what to -- we have the new concept and new debate and what a fresh debate.

And what I'm saying is the concept of the -- as I call it -- a flexible integration. So let's countries which would like to be integrated more than they are integrated in others could follow a little bit later on, not punished or excommunicated, with open doors for the later integration.

So what we need, it's the -- we can go to the roots, liberalization of the -- of the European trade and the measures leading the continental -- the better competitiveness and to play the much better and much intensive role as a global player, as the message.

DOS SANTOS: OK. Jan Fischer, thank you so much for joining us there. That's the Czech presidential candidate and former Czech prime minister, Jan Fischer, joining us live from Washington.

Well, let's move further afield, because many Japanese companies have managed to suspend their operations in China temporarily, largely because of protests that continue apace across that country. Now these two nations are currently embroiled in a dispute over the sovereignty of a group of islands in the East China Sea, islands that may -- just may be sitting on massive oil reserves.

As Stan Grant now reports, the temperature of some Chinese streets is rising on this issue pretty fast.


STAN GRANT, CNN CORRESPONDENT: Walking along here with the protesters outside the Japanese embassy, there are thousands of people here on the streets, very strong police (inaudible) just look over here as well. As you see over here, some of the barricades are up and they are blocking entry to the embassy itself, trying to stop even more people coming through.

Of course, protests like this in China are normally set down the moment they begin. They don't like public displays of anger. But this is a very different issue. This is an issue involving Japan, a strong sense of nationalism (inaudible).


GRANT: Excuse me?

UNIDENTIFIED MALE: Here is not a press area.

GRANT: OK. Where is --


GRANT: Thank you, sir. Thank you, sir.


GRANT: We are being moved.

People are carrying banners and carrying slogans, and we're seeing (inaudible).


GRANT: (Inaudible) being carried and being held aloft. And they're just being moved out of here now. Some of these protests have turned nasty over the past few days. There have been attacks on Japanese businesses. There have been protests of Japanese consulates in more than 50 cities across China. As you see, there's a helicopter just above us here.

UNIDENTIFIED MALE: (Inaudible). We don't like Japan.

GRANT: Why? Why don't you like Japan?

UNIDENTIFIED MALE: Why don't you like (inaudible)?

GRANT: But why?


GRANT: (Inaudible) Japan islands? Diaoyu Island? Who owns Diaoyu Island?


GRANT: (Inaudible). (Inaudible) Diaoyu Island?


UNIDENTIFIED MALE: (Inaudible) fighting for Washington, D.C. (Inaudible).

GRANT: And the concern of most officials is that these protests could get out of hand. They've already warned people that they must protest calmly, they must protest lawfully.

But there is no doubt that this issue over the islands, an issue that involves history, an issue that involves age-old enmity between Japan and China and an issue very much about the rich resources that lie underneath the islands themselves have certainly sparked widespread anger and the type of nationalism that we're seeing on the streets here today.


DOS SANTOS: Well, Fitch says that the ratings for some of Japan's major electronics and car companies could come under pressure in the future if this situation escalates. The ratings agency says that Japanese companies will, at least in the short term, be expecting to take a sales hit.

Now several Japanese carmakers shut down their Japanese operations just on Tuesday, including the likes of Honda, which finished down about 21/2 percent after they had to shut some plants in China as well. What we saw was that also other (inaudible), for instance, Toyota, closing some factories, too.

Remember that Toyota's shares down about 2/3 of 1 percent (inaudible). That's a company that's relying on China for 12 percent of its growth just to put it into context. Mazda also followed suit, saying that it was having to suspend some operations. Its shares did finish higher on the day, but Nissan has particular cause to be worried here.

According to Fitch Ratings, it has more exposure than any other Japanese car company in China, just to give you an idea of exactly how much we're talking about, 26 percent of Nissan's total sales came from China this year.

And then that brings us back to the electronics makers, again, companies like Canon had to shut factories on Tuesday while Panasonic has already shut down two plants after they were badly damaged in those violent protests on Saturday.

Tonight, Christiane Amanpour gets the reaction to the increased tensions between China and Japan. That's when she talks to Tung Chee Hwa, this is Hong Kong's first chief executive. All that and more to come in 20 minutes, right here on CNN.

Do stay with us, though, because some say it's a threat to jobs and national security. But on the other hand, some say, well, it's a step towards a more efficient defense industry. We'll have the latest from BAE Systems and EADS' plans to merge.





DOS SANTOS (voice-over): Time now to answer today's "Currency Conundrum," the boss of the Bundesbank has slammed unlimited bond buying by central banks. He likened it to, quote, "an emperor giving out paper money, which only solves the kingdom's financial woes for a short time."

Well, earlier in the show, I asked you what piece of literature was (inaudible) citing?

And it was A, Johann von Goethe's "Faust." (Inaudible) was referring to the first part of the second (inaudible) in which Mephistopheles disguised as a jester convinces an emperor to give out paper money, which works for a little while, but in the end, well, it ends badly with the German version of Hell, which many people refer to as inflation.

Let's point out that the wonderful "Currency Conundrum" there, "Faust" is actually my favorite book.

Now, a plan to merge British (inaudible), BAE Systems, and EADS is facing intense scrutiny. Shareholders, military experts and politicians are all cautious about the deal. (Inaudible) is the European Union.

The merger would create the world's biggest aerospace and defense company worth no fewer than $49 billion with combined sales of $93 billion every single year. It's awaiting the approval of the E.U. Competition Commission at the moment. E.U. regulators first need to example the so- called issue of golden shares, those which would be held by national governments.

Regulators are concerned that the impact they could have on competition across the block (ph) could skew the situation. Well, British politicians, shareholders and others all say that the deal could cost jobs and also compromise national security.

And in fact, earlier today, I spoke with the British Conservative MP Julian Brazier, who's also a member of the Defense Select Committee, which sets military defense policy. He's wary of the merger, and I asked him why.


JULIAN BRAZIER, BRITISH MP: First of all, the nominal deadline of October the 10th for a deal of this magnitude is ridiculous as Parliament dissolves today and doesn't come back until after October the 10th. So there can be no parliamentary scrutiny unless that's deferred.

But I think the more important underline point is the concern that this would mean that the lion's share of the U.K. defense industry would be owned by a consortium in which the French, German and Spanish governments all held major stakes.

DOS SANTOS: Why is that such a bad thing, then? If the U.K. government manages to hold onto its stake, why is that such a bad thing?

BRAZIER: Well, the U.K. government has a golden share, which gives it certain powers of veto. But it hasn't had any involvement of any kind in British aerospace's management for many, many years, other than having the power of veto over certain kinds of exports. That's not the case at all with all of our continental counterparts.

There are still very close links as well as the formal links, very close informal links in France, for example, between their government and their defense industry.

I'm strongly in favor of U.K. cooperation with France, military cooperation, industrial cooperation and so on. But the French tend to have a seamless view of areas of industrial policy which, in Britain, we would regard as being a matter for the market. So you're trying to mix things that you're not really like with like.

DOS SANTOS: Then again, some people would say, well, this goes back to the paradox of having a strategic important industry and company like BAE Systems being publicly listed on the stock market.

BRAZIER: Well, most of America's defense industry, in fact, most of the Western world's defense industry is in the private sector.

The difference, perhaps, is that the extent to which governments interfere in their armaments industry varies a lot from country to country, and my fear would be that if this deal went through we would see a gradual migration of jobs in the cutting end of design and development, gradually migrating away from Britain towards some of our continental neighbors.

DOS SANTOS: Let's get an update on the weather picture for you, Jenny Harrison's standing by to tell us all.


JENNY HARRISON, CNN METEOROLOGIST: Hey, Nina, not a bad for a few days ahead across much of Europe. It's a fairly quiet weather picture. It can't stay quite the same across the United States, in particular the Eastern Seaboard.

Look at all that cloud. Now overnight Monday into Tuesday, eastern Tennessee, that's that state there, picked up about 200 millimeters of rain and there's plenty more of that coming in with this front and as well as that, because those are thunderstorms look at the delays of all the major airports.

There are all the big ones along the eastern sort of side of the country, ground stop in place right now in new airports across into Washington. And you can see elsewhere two hours 35 minutes at JFK.

So that is because of the thunderstorms but also of course thunderstorms in other locations, which can also mean that planes can't be taking off because they're not going to allow them they want to get to.

So it really is a very, very messy day this Tuesday for traveling. And in fact, as we go through Tuesday into Wednesday morning, still we still a little bit rain just clinging across the far northeast. A lot cooler in the wake of this system bout. We could see some more very heavy rain coming in with this storm system.

And there's always that threat of tornadoes. So we could see some strong winds and tornadoes. Another reason of course why it's dangerous for planes to be taking off or attempting to when there are thunderstorms out there.

The winds at times it could actually gust about 100 kilometers an hour. So look at all this massive area that is under some form of wind advisory or watch. And then as well as that, we've got a few flood warnings and watches in place as well.

They're beginning to spread up the East Coast now because that rain is also pretty much in line with those flood warnings. But remember of course the rain actually began on Monday so some of those locations.

Now it is moving pretty swiftly, this system, so really if you go through Tuesday into Wednesday, it should clear out pretty well after that, just a few lingering showers and thunderstorms into central and southern areas of Florida. And it'll feel cooler, which is a nice thing for the most part. We can see the accumulations (inaudible) that eastern side of the country.

But these humidity really again very low. So it should be feeling pretty nice once the rain is gone, 24 in Atlanta and 21 Celsius up there in New York. Now as I say, in Europe, it is a fairly quiet picture.

We've seen some rain, some scattered thunderstorms even come through in the last few hours, all of that is tied to a front which is moving fairly swiftly eastwards. You can see the thunderstorms they've just been cropping in the last few hours, through eastern France, southern areas of Germany.

The winds have been quite brisk across the northwest there beginning to ease. And this is the reason for all of that, this frontal system that's moving there it's eastwards as we go through Thursday.

And then we've got high pressure behind that system. So it really should be fairly quiet. Then we just begin to see a bit of rain pushing into northern sections across into Scotland, temperatures, they will be cooling down but it should be nice in the sunshine with 18 in Paris, 17 in London, Nina.

DOS SANTOS: Jenny Harrison, thanks so much for that there at the CNN International Weather Center.

Now we're (inaudible) set up his very own business. Now it's time to say farewell. Some final words from a Millennial for the mission (inaudible).



DOS SANTOS: Today we say goodbye to Millennial with a mission, David Lloyd. We've watched him step out and step up his own business and also learn valuable life and business lessons along the way. Richard Quest asked him where he'll go from here.



UNIDENTIFIED MALE (voice-over): From the day our cameras started rolling back in march of this year, David Lloyd was a Millennial on a mission.

DAVID LLOYD, MILLENNIAL: I've got many interests (inaudible) achieve nothing would be very disappointing.

UNIDENTIFIED MALE (voice-over): From Santiago, Chile, where he's based, we've seen him expand his business.

LLOYD: Right now, we're debating between various countries -- Brazil, Mexico and the United States.

UNIDENTIFIED MALE (voice-over): We've witnessed his success on the international stage. We've gone back in time, setting his insight (inaudible) the man and the boy. And throughout it all, we heard from him a candid and (inaudible) Millennial. Today, David Lloyd bids farewell to "The Millennials."

But first, Richard Quest sat down with him for a final close-up.

RICHARD QUEST, CNN HOST: We've watched a lot of your story, your move to Santiago, the way in which you have set up the business. But what I really need to know from you is before you became involved with "The Millennials," did you even know what -- that you were part of this group called the Millennials?

LLOYD: The term "Millennial" I was aware of; however, I hadn't really understood exactly what it meant.

QUEST: And what did you think?

LLOYD: To be honest, when I read the description, I thought that the typical description of a Millennial was potentially a bit of a brat (ph) (inaudible) very full of himself or full of herself and, I mean, I think some of the attributes which are celebrated are very positive, working hard, wanting to achieve, dedication, persistence.

But I think when it flies into the arrogance which quite often it does in the descriptions I've read, that's something I'd like to steer away from.

QUEST: And like most Millennials, who then go into the workplace and have to work within a structure, and work their way up, you branched out. You went on your own and you had to learn self-reliance.


QUEST: Which is not a traditional Millennial -- Millennials believe they've got it, but frequently don't actually put that to the test. But you had to, didn't you?

LLOYD: Yes, I had to put it completely to the test because if you go out on your own and start your own business, there's no safety net. There's no protection.

QUEST: And when did you realize that?

LLOYD: After the first two days of starting, I realized that if I didn't do the work, no one else would. Why? Because I was the only person working.

QUEST: But more than that, isn't it? If you don't do it well --

LLOYD: If you don't do it well, then it will be a complete failure.

QUEST: The plane lands in Santiago. You get off the plane. You get to your apartment and you think, if I don't move this mountain, it ain't going to move.

LLOYD: Exactly. And but I think that it was this experience which fully consolidated in my head that there are no prizes for being a shrinking violet. There are no prizes for not giving everything. There are no prizes for not throwing your hat in the ring. And maybe it doesn't come off. And if it doesn't come off, it's better to be a glorious failure than never to have tried.

QUEST: Do you have a business card on you?

LLOYD: Yes, I do.

QUEST: Ah, look at that.

LLOYD: Managing director. I think that's --

QUEST: Managing director.

LLOYD: What would you like (inaudible)?


QUEST: When you had to have this card written --


QUEST: -- and you had to put managing director, 27-year old -- or 26- year old then --


QUEST: -- managing director.


LLOYD: Completely. I mean, as you asked me earlier, when you asked me, and are you profitable, I mean, yes, we are. But the reality is we've got a hell of a long way to go until we're where we want to be. So that's my point in not being humble, because you'd be pretty upset to be arrogant about being managing director of a 12-man organization.

QUEST: It's better than being managing director of a one-man organization.

LLOYD: True. That's true.

QUEST: What is your goal?

LLOYD: We would like to be the -- I would like us to be the biggest travel company in the world -- student travel company in the world.

QUEST: Right.


QUEST: All right. Nothing like starting modestly.

LLOYD: (Inaudible).

QUEST: Modest aspirations.

LLOYD: Modest aspirations. I think it's right to have very ambitious aspirations and then if you don't achieve them, but you still have achieved something great and then have to be modest with it.

QUEST: Are you likeable?

LLOYD: Am I likeable? I think I'm a likeable person.

QUEST: Is your generation likeable?

LLOYD: In my generation, I'm -- I see a real increase in -- I think many attributes which you could link to the negative side of Millennial, I think that there's definitely a deep increase in material goods. I think that respect for old-fashioned virtues, such as humility and modesty, are definitely going down. So I think actually, possibly the generation isn't that likeable, to be completely frank.


QUEST: (Inaudible).

UNIDENTIFIED MALE (voice-over): Goodbye, Santiago, hello, (inaudible). We introduce you to our new Millennial, only on CNN.


DOS SANTOS: Manchester United has released its first full financial results after going public last month. The (inaudible) net profits were (inaudible) 80 percent for the year to June, the first year. But it wasn't all good news (inaudible) Alex Ferguson's team.

United took a $24 million loss in the last quarter after an unusual season in which this club failed to take home any silverware at all. Since then, United has boosted its (inaudible) and they say that they're confident that revenues will increase over the next few years to come.

And on that note, it's time to say goodbye. That's it for this edition of QUEST MEANS BUSINESS. Thank you for joining me. I'm Nina dos Santos in London.


DOS SANTOS: These are the headlines this hour.

Twisted wreckage is all that remains of a car that a suicide bomber used to kill 12 foreign workers in Afghanistan today. The blast occurred on a highway near Kabul airport. A militant group linked to the Taliban (inaudible). It says that the blast came in response to the anti-Islam film that ignited widespread protests.

In eastern Afghanistan, an Afghan civilian was killed (inaudible) second suicide attack.

Striking workers at the Lonmin platinum mine in South Africa could return to work on Thursday. Their union says that it's accepted now an offer to raise their pay by 22 percent. The workers still have to approve the deal. Last month, the strikes turned violent with 44 people were killed at the mine.

Chinese protesters held (ph) plastic bottles and eggs at the Japanese embassy in Beijing on Tuesday. It was one of numerous protests across cities in China.

(Inaudible) a French magazine about 2,600 for publishing topless photos of the Duchess of Cambridge. The magazine called "Closer" has been ordered to hand over the original photos (inaudible) royal family.

That's a look at the main stories that we're watching for you here on CNN. "AMANPOUR" is next.