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QUEST MEANS BUSINESS
US Employment Picking Up Pace; US Outlook; Dow Hits Record Highs Fourth Straight Day; Corporate Profits Up, Wages Down; Fitch Downgrades Italy; New Czech President; Czech Republic and Europe; Pound Under $1.50; Trouble in SimCity
Aired March 8, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Something must be working. The US job numbers have smashed the market expectations.
And the market marches on. The Dow on track for a record-breaking week.
Oh! And also, that computer game calamity. Why the new SimCity has been more of a ghost town.
It may be Friday, but we're still together, and I mean business.
Good evening. The United States is hiring in the hundreds of thousands of employees as employers are now demanding more workers. The dollar is gaining strength, stocks are continuing their record run. It would all seem to suggest America is going back to work.
QUEST: Look at the numbers. Non-farm payrolls rose by 236,000 in February. That easily beat the forecast. Because those new jobs were created, the unemployment rate fell back, just a tad, but it fell, to 7.7 percent. It's the lowest it's been since 2008.
And if you look at the details of this, it shows that the numbers of jobs being created is actually accelerating. So, look how we have -- and even the revisions -- so, we had an upward revision in December, a downward revision in January, and a strong February number.
If you take a moving average, which is by far and away the best way to do it, or at least look at the average from November through to February, you really do see that January is the odd one out. We'll talk about that with Julia Coronado in just one second.
In fact, the market overall has been very much in one of -- one of flux. Julia Coronado joins me from BNP Paribas. We look at this, and we look at it carefully. We see the anomaly of January. So, what's your gut feeling?
JULIA CORONADO, CHIEF NORTH AMERICAN ECONOMIST, BNP PARIBAS: Well, I think my gut feeling is that what we're seeing -- we've been all very focused on the fiscal tightening story, but what's happening alongside that is that a powerful monetary stimulus has been put in place last year, and it is finding very good traction in the housing market and in in consumer demand for autos and other durable goods. And we're seeing those sectors contribute significant numbers of jobs.
So, yes, we're absorbing a pretty significant fiscal blow, but monetary policy is actually gaining traction rather than fading in its powerful impact --
QUEST: Right. So -- but --
CORONADO: -- and --
QUEST: -- but --
CORONADO: -- and we're starting to hire.
QUEST: Ah, but do we as yet have the -- what they call the virtuous cycle that's been created? The new jobs create more demand create higher spending create new jobs create -- you know how this cycle goes on and on - -
QUEST: -- into the distance. Are we seeing that yet?
CORONADO: I don't think we're there yet. If you look at some of the details of the surveys, you mentioned the unemployment rate decline. Actually, a lot of that came from another decline in labor force participation, the quality of the jobs being created, there's a lot of part-time jobs in this report.
So, it's still too early to call virtuous cycle, and I think that's why this report hits the sweet spot for financial markets. This is not a game-changer for the Fed. This does not meet the bar of substantial improvement in the labor market outlook that they want to see.
CORONADO: You mentioned the moving averages. Yes, January was below trend, but the average job gain right now has been pretty steady between 180 and 190. This report was stronger, but probably --
QUEST: All right. OK --
CORONADO: -- that's our run rate, somewhere between 180, 200K. It's good --
QUEST: It's good.
CORONADO: -- but we want to see better numbers.
QUEST: And we've got to factor in the sequester, the forced spending cuts.
QUEST: Now, look --
CORONADO: And that is coming down the road.
QUEST: If that takes, say, a half --
CORONADO: That is definitely going to take its toll.
QUEST: If that takes a half a percentage point out of GDP, the president says over the terms of the sequester, you're looking at 700 K for jobs, no one's expecting that in a week next Thursday. But when would you expect to see sequester effect in confidence numbers, employment numbers, and the so forth?
CORONADO: I think we'll start to see the impact in the March employment report, so the one that we get next month. I don't think it's going to be an outsized impact in March alone. And remember, a lot of the adjustment will not be in jobs themselves, but in hours worked. So, there's going to be a lot of government employee furloughs or unpaid leave.
CORONADO: So, it will hit consumer budgets, but won't necessarily show up as a job loss. So, it's going to be a very gradual impact, both in the spending numbers and in the hiring numbers. It will show up with more force, though, on the public hiring side starting with the next report. So, that's going to be an offset to the strength in the private sector that we're seeing.
QUEST: Julia, good to see you. Have a good weekend. It's funny that we're talking about rising jobless numbers --
CORONADO: You do the same.
QUEST: -- than falling jobless numbers, which we've talked about so frequently before. Julia Coronado is in New York at BNP Paribas.
The market is up 48 points. We are at another record, obviously, since these records just keep rising, and that's on the back of what we've seen here with these non-farm payrolls, this strong number.
It is -- today is an anomaly, because more often than not, the jobs reports are at odds with the market, and now we see them in -- combined, if you like. Felicia Taylor is in New York. I trust, young lady, that you're wrapped up well against the elements, which is exactly what you are.
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: I am wrapped up well, but I'm actually shivering, it's so cold out here. But nevertheless, we just heard a lot of reasons why this jobs numbers isn't being taken by the marketplace as really a positive.
A gain of 236,000, you would have thought we'd have seen a much greater rally, but the truth is, and you heard about this, the participation rate isn't as great as we thought. Hours worked isn't increasing, wages aren't increasing.
In other words, corporate America isn't necessarily putting that money to work, especially when you take a look at the banking sector, and they're not increasing dividends even though they're sitting on an enormous amount of cash. Take a look.
TAYLOR (voice-over): They were partying like it was 1999, back when the Dow first hit 10,000. This week, with the Dow hitting record highs for the first time in five years, there was far less celebration.
KEN POLCARI, O'NEIL SECURITIES: People don't feel the euphoria that they felt when we were making new highs back in 06, 07, right? When everything -- when the economy was better.
(STOCK EXCHANGE BELL)
TAYLOR: There's a good reason why few are cheering: companies are prospering, while their workers are falling further behind. As a percentage of GDP, after-tax corporate profits are at record highs, but worker pay is close to its lowest-ever share of GDP.
According to the economic policy institute, a liberal think tank, many workers have seen little improvement in wages and benefits for about ten years, even as their increased productivity has helped fuel profits. And the wealth gap in the US continues to resonate.
UNIDENTIFIED MALE: One percent of America has 40 percent of all the nation's wealth.
TAYLOR: A YouTube video that purports to have crunched the numbers has gone viral. To be sure, the US continues to add jobs, but the majority of positions are lower wage jobs.
And even if you have steady employment, you may not be sleeping easy. A recent study from Rutgers says almost half of US workers remain terrified of losing their job in these uncertain economic times.
TAYLOR: So, it's clearly not all rosy out there yet, and one number, of course, as you also just heard, doesn't make a trend. We need to see at least three months of greater than 200,000 job growth.
I'm now joined by Carl June, who recently got a job as a consultant. Do you think enough is being done in the labor market to improve things? And how did you find that job?
CARL JUNE, NEW YORK RESIDENT: Well, I got this job through a recruiter. And I think for the year and a half I've been working consultant jobs, where I'm looking to attain something permanent. So, I think the market is still pretty rough out there, where for myself a year and a half, I only was able to obtain something consultant for four months, five months at a time.
TAYLOR: And have you been able to get the kind of wages that you expected, or has it been reduced?
JUNE: Well, it's definitely been reduced from what I've been working permanent. So, it's definitely reduced, but at this time, you have to take what they pretty much give you at that time. So, yes, it's definitely been reduced.
TAYLOR: And do you think Washington is doing enough to help?
JUNE: I think they could do a lot more, because there are a lot of different people who have the experience who are looking for jobs and there are still not enough jobs out there with corporate America, where they're looking to hire people only on a temp time, and that gets kind of frustrating for the people -- person like me, who's actually trying to look for full-time work.
TAYLOR: Well, I hope you do find full-time work. So, you can see, Richard, that things are very difficult out here in the jobs market. A lot of people are having to struggle to find anything, and they'll take whatever they can get.
But you know what's interesting, I spoke to a couple of traders, and there really is still the concern that the Federal Reserve may step out sooner than expected, and that's why you're also not seeing the gains that we should see in the marketplace today.
QUEST: It's what you call an internal devaluation process, Ms. Taylor, when the devaluation comes not just from the currency, but also from the wages. Britain had numbers out this week. And the question becomes this: are the people -- or are people just satisfied that unemployment is coming down, jobs are being created, and it is a job at any cost?
TAYLOR: I think it is a job at any cost, is what you're -- I think that's what you said. And -- like Carl did, he took whatever he could. It's not like there's a whole lot of choice out there, and people don't believe that enough is being done in corporate America to actually create those jobs. One number is not enough to change the overall picture.
And if you think about it, since January's number was revised down to 119,000, that is almost a loss of 60,000 jobs, so basically this number is kind of a wash.
QUEST: Felicia Taylor, who had better go back inside quickly --
TAYLOR: I know!
QUEST: -- before -- sick! It's a picture postcard scene behind you with all that snow and yellow taxis.
QUEST: So you just carry on doing yeoman-like work in the snow.
The changing of the guard in the Czech Republic. A new pro-European president is sworn in, and I ask the country's foreign minister if the new president means a new relationship between Prague and the EU. It's QUEST MEANS BUSINESS at the end of the week.
QUEST: Well, as a reminder that the crisis is not over in Europe, Fitch has downgraded Italy's debt, because of the country's ongoing political instability. It's now Triple-B-Plus. And worryingly, perhaps, most of all, that's at risk. There's a negative outlook.
Fitch says the inconclusive results of the elections make it unlikely that Italy will have a stable government anytime soon, and of course the ten-year bonds rose slightly, too.
The Czech Republic has sworn in a new president, and he brings with him a more inclusive, pro-European tone. Milos Zeman took the oath of office in Prague today. In his first speech -- and this was crucial -- in his first speech, he said he wanted to unify a divided nation in replacing Vaclav Klaus, an outspoken Europe skeptic and a polarizing figure in Czech society.
The country's foreign minister is Karel Schwarzenberg, and he lost the presidential election President Zeman. I asked the foreign minister if the new pro-European leader would be willing to sign the EU's fiscal compact, something his predecessor had said he was not going to do.
KAREL SCHWARZENBERG, CZECH FOREIGN MINSITER: Yes, he's ready to sign it, but only at the moment when we are entering the eurozone. So, we will see what he will actually do, as politicians sometimes change their mind.
QUEST: Is it your gut feeling, Minister, that the euro -- both the eurozone and the EU has -- is making sufficient progress to make the thing work better?
SCHWARZENBERG: They are making progress. If it will be sufficient, we will see after some time. I'm not a prophet. But doubtless they are doing their best.
QUEST: Well, that's a very grudging --
SCHWARZENBERG: No --
QUEST: That's a very -- I mean, I've given you a straightforward opportunity to say they are making good progress of they're not making good progress.
SCHWARZENBERG: They are making progress -- good progress, but I just say I don't know if it will be sufficient, because the difficulties are enormous, let's be honest about this, too.
QUEST: Those enormous difficulties have just about driven the project off the road, haven't they?
SCHWARZENBERG: Not quite off the road. The project of Europe is going on. We shouldn't forget the European Union is a political project. It's not an economic project.
QUEST: That's its problem. That's exactly its problem. They have tried to gerrymander the economics to suit the politics, and it's blown up in their face. That's the problem.
SCHWARZENBERG: Absolutely you are right. But the political project stays and goes on.
QUEST: As long as Germany pays the bills.
SCHWARZENBERG: Not only. And I think it would be madness if we would split Europe up again. That would be the greatest madness we could do.
QUEST: When you meet William Hague or you meet David Cameron, with their referendum in 2017, what will you say?
SCHWARZENBERG: That's a British affair. That's up to you how you decide. I would be desperate if the United Kingdom wouldn't be a part of Europe. It an elementary European country.
And Europe without Britain isn't really Europe, which we know since at least experience of the 20th century. It was Britain who resisted Hitler, it was Britain who saved the honor of Europe. We need Britain in Europe.
QUEST: That's the Czech foreign minister. Now, tonight's Currency Conundrum. Which -- well, first of all, here's a bank note. Which unit of measurement is the 100 koruna bank note currently -- commonly known as? This is the Czech currency. What's its nickname, like the buck or the quid?
Is the 100 note known as a kip, a kilo, or a karat? That's with a K, not a C. We'll have the answer for you later in the program.
Today, the dollar's up, the pound and the yen are equal, but look at the pound. It is now under $1.50 to the US dollar. Those are the rates --
QUEST: -- this is the break.
QUEST: Some people absolutely adore playing with this. They could play it for hours and hours and hours. It is, of course, SimCity. It's an urban planning nightmare -- or dream for the digital age.
The problem is, the latest version of SimCity released on Tuesday, and paying customers around the world haven't been able to play with it properly because the new SimCity demands that players stay online as they play. You can only play -- even singularly, never mind playing with somebody else, even by yourself, you can only play online. There's no disc, there's no downloading.
The appetite of the game has been so great, it overloaded the servers, and the makers, EA, or Electronic Arts, say they're working around the clock to solve the problems. Here's the message from one of their senior producers.
They basically say this team has put everything into this game and won't stop until things are smooth. And they go on, "We ask our fans to be patient as our team works diligently to fix the issues."
The difficulty, of course, is you pay your $60, you've got to go online, you can't get online, you can't play the game, and you're starting to wonder why you paid the $60.
It's not only a story about SimCity, it's also a story about how we are now using DRM, we are going online, we are playing our games, listening to our music, watching our videos via online and the cloud. I put this to Shelly Palmer, the author of "Digital Wisdom," and I asked him if EA was to blame for this through incompetence or simply misfortune.
SHELLY PALMER, AUTHOR, "DIGITAL WISDOM": It's really a great question, Richard, and it's both. EA definitely messed this one up, there's no question about it, there's no way to excuse what they've done. They just made a mistake.
They underestimated the demand for their product and they're paying the price. And they're paying the price fairly heavily, because they're charged people $60, and they can't get online and they can't play their game.
But here's the important part. They're requiring you to be online even if you're in a single-player mode, and the reason they're doing this is a last-ditch effort of authentication so that you won't pirate the game.
QUEST: How far is this a generational thing? In the same way that the generation that's used to paying for music online is now coming through and more accepting of that, or movies online. They're -- a generation will come through that accepts you pay $60 and you don't get a disc. You don't own anything. You're basically getting a license to use it on somebody's server.
PALMER: Well, but that's exactly -- that's exactly right. The question that you've asked is the right question. What does it mean to own something in 2013 and beyond? You don't really need to own a song or a movie anymore, you can just own access to where it's stored. That's the whole concept of Cloud living, or having content in the Cloud.
Here, it's a little bit different. Not only do you not get the disc with the game on it, they want you authenticated so they know who you are. They want all kinds of information about you, because in that data comes the information that they will convert to wealth for themselves for EA. They know the data is as important to EA as your money is. So yes, you pay, and you get access.
And paying for access is pretty much what we're all going to do . You will watch DVDs go away, there won't be any more DVDs to buy, no more CDs to buy. There'll just be access to Cloud.
QUEST: You've just walked into my trap, because the whole --
QUEST: -- thing depends on internet access. And if I'm at 35 --
PALMER: Yes. Yes, sir.
QUEST: If I'm at 35,000 feet on a plane or I can't get access to the Cloud, as I've discovered, for example, recently with SkyDrive from Microsoft, if I can't do all of that, well, you know what I am.
PALMER: Of course. Well, look, that's that idea of a single point of failure. So, there is a reason to have things locally stored. There is a reason to store something like your important checking data, your checkbook, your finances, and even some of the content that you hold near and dear. There might be a reason for you to have it on your own Cloud, on your own media server.
But for the most part, if you don't have access to the Cloud for something as ubiquitous as the Harry Potter series, you'll get that again. The question becomes a little bit more dicey when you've built a city in SimCity, or you've built 20 city blocks for yourself, their server crashes, and it's gone. You've paid $60, you can't get online, and you've got nothing.
QUEST: Listen to you, Shelly. It's a game. SimCity! I don't care - -
QUEST: -- whether you have built a conurbation, a city, or an entire infrastructure, it's a game!
PALMER: Yes, but I paid $60 for it, Richard, and I feel sad about it. I mean, that's the story. If I paid -- if you paid $60 for something and you didn't get any value, you'd be mad. I -- you'd be really mad. I know you, you'd be really mad.
QUEST: I think -- I remember playing the very first edition of SimCity, it must have been in the mid-90s, on a computer that wasn't fast enough to run it. The whole thing was highly frustrating, and I think it took me about two and a half weeks to build my first house and never used it again.
Well, there we are. Going to have a change of mind. World equity markets are rallying. Rally, rally, rally. After the break, what's behind this rally, rally, rally.
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, the news always comes first.
The Venezuelan vice president and the acting leader, Nicolas Maduro, has delivered an emotional eulogy for President Hugo Chavez in Caracas. The funeral lasted about two hours and included appearances by the Iranian president, Mahmoud Ahmadinejad, and the American Baptist preacher Reverend Jesse Jackson. President Chavez died on Tuesday after a long struggle with cancer.
A hundred and fifteen cardinals will begin their conclave to elect a new pope on Tuesday. All the cardinals are now at the Vatican, and they're holding general meetings and preparing for the conclave. The Vatican says they will go into seclusion after a special mass to be held on Tuesday morning.
As you heard on QUEST MEANS BUSINESS, US unemployment rate fell two tenths of a percent and now stands at 7.7 percent. More than a quarter of a million new jobs were added last month, with construction, hospitals, and manufacturing sectors all reporting strong gains.
A son-in-law of the late al Qaeda leader Osama bin Laden has been arraigned in a New York courtroom. Sulaiman Abu Ghaith pleaded not guilty to charges of conspiracy to kill US nationals.
Twenty-one UN peacekeepers being held by civilian rebels near the Golan Heights may soon be set free. The head of the UN peacekeeping force says the Filipino peacekeepers could be released during a brief cease-fire. However the Syrian National Coalition is calling on the International Red Cross to evacuate the soldiers as well as wounded civilians.
(END VIDEO CLIP)
QUEST: Anyone who had any interest in the business world, particularly equities, knew that global stocks soared and that they've been boosted by monetary easing, cheap money and now a better jobs report.
I insist that you join me in the library as we just look at a week that saw the Dow, the DAX, the Nikkei all have such strong sessions. The Nikkei -- remember the all-time high for the Nikkei was back in 1989. But it closed at a 41/2-year peak, up nearly 6 percent this week.
Not only is there a new head of the Bank of Japan, who's committed to more easing to get rid of deflation and to restore growth, revised Q4 showed Japan escaped recession. The yen is weakened around 20 percent against the dollar.
That boosts this incredible exporting nation and puts it more competitive. As for Germany, where we were last night, 8,000 on the DAX, in trade first time in five years.
And the crucial comment by Mario Draghi yesterday, that not only will he keep -- he will keep his long-term refinancing and he will keep the open-ended allotment, it all shows that it will keep going on an open-ended basis, hence of course why the DAX and other markets have been strong. But this was -- this was the star.
The Dow has now hit the fourth straight intraday record; it's up 2 percent on the week. And if you look at how it's gone absolutely like a rocket.
Alison Kosik is on the floor of the stock exchange. Alison, you and I in our relationship of years have seen the highs and the lows of this market.
So tell me --
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: We have.
QUEST: -- what's the move? Never mind the numbers; never mind the reason. What do they think there?
KOSIK: You know what, the mood is really good, although today it's a little more cautious. You're seeing the Dow for one. Let's talk about the Dow for one.
It's at record highs. As you say, they've hit the trifecta of highs - - at least, at the close, three days in a row, it's going for a fourth right now. How could that not help the mood, right? Well, now guess what the focus on? The focus is on the S&P 500. You look at the S&P 500, it's at 1,549. Everybody's looking for 1,565.
You're seeing a little caution, Richard, because we've seen the S&P 500 hit a little more resistance. And so you're seeing it back down. I know all the focus has been on the Dow. But this trading floor is really focusing on the S&P 500, which is a broader measure of the stocks, Richard.
QUEST: So since it's a Friday and we have this extra second or two, where do you stand, Alison, at two views in CNN at the moment, some people are -- some of our colleagues saying the Dow is not important. It's 30 stocks.
Others, like Ali Velshi, reminding us, yes, but they're the big 30. And they're vast parts of the economy.
Where do you stand on it?
KOSIK: I think I stand in the corner of the Dow really isn't representative of the economy anymore. I mean, you see how all this -- how many stocks have come and gone. Actually, the Dow these days is very tech- heavy. We're already got a lot of tech stocks. Think about the Nasdaq. I'd go with the S&P 500. I say let's watch the S&P 500, see what that does.
Now if you think the S&P 500 break through that resistance, I'd say the sky is the limit, because what would ultimately probably happen is, if the S&P is able to break through that resistance level, you're going to see the Dow fall as well and keep going higher. So I like to watch the S&P 500.
How about you, Richard?
QUEST: I still like the Dow. I'm a Dow man because I still believe it's got that psychological point.
Alison, good to see you. It's been a good week for equities. And let's face it; unless you've really shorted the market, most people are long in their pensions funds, in their retirement accounts and then when you do see the market -- when you see these sort of numbers that we have seen during the week, you've got to admit that it is a pretty powerful message.
So when we come back on QUEST MEANS BUSINESS --
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: (Inaudible).
QUEST (voice-over): I assure you, the family viewing you don't want to know what was behind the beeps. But it is Justin Bieber. He walked out of his hotel and into an enormous amount of.
QUEST: This is the check 100 koruna note. And I wanted to know what's it more commonly known? And the answer is B. It's known as a kilo. The note is a stocka (ph), which is the Czech for a kilo. So it's really not a kilo; it's a stocka (ph). But if stocka (ph) is a kilo, so we'll accept kilo instead of stocka (ph).
(Inaudible) we're all clear on that.
Justin Bieber's week has ended as it began: badly. This is what happened as the teenage star left his hotel in London this evening.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: (Inaudible).
UNIDENTIFIED MALE: What did you say?
UNIDENTIFIED MALE: (Inaudible).
QUEST (voice-over): You really don't need me to tell you what those beeps are for.
Mr. Bieber was heading to the London (inaudible) Arena, where he's been playing a series of concerts this week, which have been all too eventful.
On Monday, he was two hours late on stage, prompting a flood of iron booing from children and parents who had to go home before the concert even began because of trains and school nights.
On Thursday, he left the stage for 20 minutes while he was treated for breathing difficulties.
And today, he had that incident. He tweeted, "Rough morning; let the paps get the better of me." But he did go on to say, "I'm only human."
Erin McLaughlin is outside the O2 Arena in London's (inaudible).
Erin, we haven't got a huge amount of time, so let's (inaudible). Who are the fans -- I mean, that, well, that is a silly question, even before I ask.
Who are the fans blaming for the bad week, Bieber or the rest of us?
ERIC MCLAUGHLIN, CNN CORRESPONDENT: Well, Justin Bieber's fans, or Beliebers, as they're known, well, they are standing by their man, perhaps unsurprisingly, Richard. After all, this is a very fervent bunch, avid Justin Bieber followers.
I spoke to some of them as they arrived tonight for -- at the O2 Arena here in London to see him perform. They're blaming the media; many of them ending up in tears for what has been -- amounts to a bad week for Justin Bieber.
Take a listen to what some of those fans had to say.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Yes, I have heard about all of the paps giving him that really hard time and everything. And him being in hospital. We was crying when we found out that he was in hospital.
UNIDENTIFIED FEMALE: The press needs to lay off him. It's not fair. He's still a young boy -- well, not boy; he's a young adult. He needs his space. He (inaudible).
UNIDENTIFIED FEMALE: People just ruined his last day. We all love you so much, Justin. And get better.
UNIDENTIFIED FEMALE: We love you. We love you, Justin.
UNIDENTIFIED FEMALE: We love you, Justin.
(END VIDEO CLIP)
QUEST: All right, now, Erin, so is -- his credit, he has tweeted when he was late that it was inexcusable, but it happened. He tweeted today, "I'm only human. They got the better of me."
So he has put forward some very reasonable, mature positions for why he's done what he's done.
MCLAUGHLIN: He has, Richard. And keep in mind, he is only 19 years old. He is still a teenager under an incredible amount of pressure and scrutiny.
QUEST: OK. I've got to ask you very quickly, you went to the concert earlier in the week. How was it?
MCLAUGHLIN: It was pretty incredible, Richard, to see how this teenage boy, really, has managed to captivate such a large --
QUEST: Oh, Erin! Erin, did you -- did you --
QUEST: -- enjoy it?
MCLAUGHLIN: When Justin Bieber came out on stage, he descended from the ceiling, Richard. He was wearing wings. Every movement he made, the girls absolutely screamed. He would take off his glasses, they'd scream. He'd take off his jacket, they'd scream. So it really illustrates the power he seems to have over the -- over his fan base, Richard.
QUEST: In a word, yes or no, did you scream?
MCLAUGHLIN: I did not.
QUEST: Thank you.
MCLAUGHLIN: I am not --
QUEST: That --
MCLAUGHLIN: -- Richard, I'm --
QUEST: Erin McLaughlin, who didn't scream at Justin Bieber.
Winter still grips much of Europe, even with a hint of flurries this weekend in the U.K. Meteorologist Karen Maginnis is at the World Weather Center. She seems the sort of woman who'd be screaming at Justin Bieber concerts.
KAREN MAGINNIS, AMS METEOROLOGIST: No, but I loved the honest answer. But, Richard, from your posh London flat, coming up this weekend, I think that you'll be able to see some snow flurries. Have a better chance during the month of March than you do at Christmas time.
And here's the reason why: we're expecting the winds coming out of the north and northeast -- here we look across Scotland into the Highlands northeast England, yes, it looks like as the weekend progresses, those temperatures are going to get increasingly colder, even all the way down here across southern England.
And as a result, either a cold rain -- maybe some flurries -- but not just there; this starts out right across central Europe, spreads across Poland and into Germany, a very vigorous weather system taking place here.
You may remember about midweek, an area of low pressure was moving across the Mediterranean. And this produced just torrential rainfall in coastal sections of France. We did see across the Alps quite a bit of heavy snowfall that produced deadly avalanches there.
Well, it looks like this very unsettled weather pattern is going to be continuing for the next several days with lots of areas struggling to make it above the freezing mark. Well, for Moscow, those temperatures are going to be between -4 and -7.
A typical high temperature this time of year is around 0. And in Warsaw, temperatures hovering below 0 as well; the average high would be around 4 degrees. And in Berlin, the snow could be heavy at times. And look for those daytime highs, which should be around 7, dropping to below 0 for Sunday and into Monday.
Here's what's going on: vigorous area of low pressure moves in and across sections of France and into the Iberian Peninsula, here comes some showers, could see some thunderstorms. But this cold ridge of high pressure is going to sweep in that cold air as it dies a little bit further towards the south. So it looks like spring not just around the corner. For this weekend, it looks a whole lot, again, like winter.
Back to you, Richard.
QUEST: Good to see you, Karen. Many thanks indeed. Good to see you.
Winter is here. The Twitter name, the name is, of course, @RichardQuest. That's where you and I can carry on our dialogue as I travel the -- me travels and you're always with me. And we look forward, of course, to that conversation and dialogue, whether it's Bieber, bankers, bonuses or monetary policy.
And that is QUEST MEANS BUSINESS for this week. I thank you for your time and attention. And for joining us for our nightly conversation. And as always, whatever you're up to in the hours ahead, I hope it's profitable. I'm back in a week.
ROBYN CURNOW, CNN HOST: In shops like these selling traditional Africa medicine in downtown Johannesburg, you can find a herb for a headache, a concoction for a cough, a remedy for just about anything. You're watching MARKETPLACE AFRICA. I'm Robyn Curnow. And although many Africans still rely on herbal remedies when they get sick, the pharmaceutical market is growing.
(BEGIN VIDEO CLIP)
CURNOW (voice-over): An everyday scene that many would take for granted. Ansoanke Furland (ph) is buying medicine at a pharmacy in Soweto Township, just outside Johannesburg and she's been coming here for years.
ANSOANKE FURLAND (PH), PHARMACY CUSTOMER: How many years? I'm not sure. But since it was open I've been buying here because it's convenient and it's nearer my place. I don't have to take a taxicab only to the pharmacy.
CURNOW (voice-over): Before this pharmacy opened 13 years ago, Furland (ph) had to travel 5 kilometers to buy medicine. Pharmacies were not a common sight in Soweto. But that's changing here and beyond, part of a growing trend of easier access to drugstores and lifesaving products.
UNIDENTIFIED MALE: We have a lot of potential in Africa with a lot of diseases being in Africa. Think the pharmaceutical business it's growing and it will grow. It's the next big thing in Africa.
CURNOW (voice-over): Ridlani Murdow (ph) owns the Mongalene (ph) Pharmacy. He told me business is so brisk that in the last decade alone his profits have soared more than 50 percent a month.
FURLAND (PH): It's because of the savings that we get from Ridlani (ph). He's very good. And he knows how to treat his clients. He knows how to talk to people. He knows how to advise people.
CURNOW (voice-over): South Africa provides free health care and government hospitals. But more and more people are seeking out new ways to get the care they want as fast as they can get it.
MURDOW (PH): People, I think when they go to state hospitals, it's not convenient. They stand in long queues.
They don't get to have a heart-to-heart talk with the health provider. And I think most important is the trust that they have in the -- in their pharmacist and the fact that I grew up here myself. And I've been here for the past 18 years, so they identify with me and it's easy for them to tell me their problems. And they can pay a little bit more to get the convenience and the time that they will have with me.
CURNOW (voice-over): It's that kind of convenience that's helping to change medical care throughout Africa. The size of the pharmaceutical industry on the continent is expected to be around $30 billion by 2016, spurred, in part, by changing economics.
UNIDENTIFIED MALE: As you have a growing, emerging class as well as a growing middle class, they're in jobs; they have a bit more disposable income. They're a lot more aware of the maladies that affect them. And the remedies.
So whereas you had people in the rural areas who may have been relying on traditional means of curing them, we have quality issues, et cetera; I'm by no means pooh-poohing them. But the quality is variable. As people move into more urban areas, accessibility to better drugs, lower priced drugs, because of the emergence of generics is a factor in that they begin to consume more.
CURNOW (voice-over): Increased consumption of modern medicine does not necessarily mean that traditional healers are now out of jobs. According to Murdow (ph), pharmacists are working with them.
MURDOW (PH): Traditional healers in South Africa, they have been incorporated into the health system. And we work with them.
When there are things that they see they cannot have (inaudible), they come here and discuss with us or they can come here and ask us to dispense so that they go and give their clients some health professionals do send their clients to traditional healers and find that people don't go there for headaches. They go there for things like marital problems.
And if you come here and you are depressed, you got marital problems, and you think a traditional healer can help you, we help you and send you to traditional healer as well.
CURNOW (voice-over): Amid new challenges come new opportunities.
MURDOW (PH): In Africa, I think those HIV and AIDS-related diseases are growing instead of going down. The rate is growing. So the opportunistic infections are the ones that are threatening us now. Looking at TB, looking at pneumonia, (inaudible) like those. So they contribute to us buying and selling a lot of medication.
CURNOW (voice-over): The industry is keeping an eye on another threat: counterfeit drugmakers, who are also trying to tap into Africa's growing demand for medicines.
UNIDENTIFIED MALE: Trying to counterfeit the presence of counterfeit keeps me up at night. We've had instances of counterfeit in East Africa. So far, that's where we've found counterfeit. It's a way we've got to live with it in that we can't eradicate it completely. But we've got to stay on top of finding a counterfeit and bringing its presence to the authorities.
CURNOW (voice-over): Still, the future looks bright.
UNIDENTIFIED MALE: Without a shadow of a doubt, I'd say that there is a boom and it's going to get even stronger as the middle class grows. And I think you've got to be on the ground now to be able to win in this segment.
(END VIDEO CLIP)
CURNOW: From medicine to mutually beneficial opportunities, after the break, we seek trade and investment.
CURNOW: Our guest on "Face Time" this week is a woman who knows a thing or two about doing business on the continent. Rosa Whitaker is the former assistant U.S. trade representative to Africa.
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CURNOW: What are the lessons you've learned working in Africa for America?
ROSA WHITAKER, FORMER ASSISTANT U.S. TRADE REPRESENTATIVE IN AFRICA: I think the lessons that I've learned that we have evolved finally from a very paternalistic approach to Africa to a partnership, a genuine partnership that's braced on enterprise, mutual respect, capital and the fundamentals of what it -- what is required to build economies and to create jobs.
And so I'm really pleased that our relationship in -- with Africa is not what it was when I started working in the region some 30 years ago.
CURNOW: How significant is the U.S. in Africa at the moment? And we -- the story of the last decade, perhaps, has been this Chinese emergence into Africa. Does the U.S. feel threatened by this?
WHITAKER: I think there's some concern. But I think it's a healthy competition because in America, for too long, we had an approach of merely giving Africa aid, you know, almost like a charity case.
And some few years ago, it started with President Clinton, continued with President Bush, I think it's continuing with President Obama, we realized that there are mutually beneficial opportunities in trade and investment.
And that you cannot really transform economies through aid. And I think that our civil society in America started saying, OK, we've spent some $30 billion in aid over a course of time. And we're still seeing acute poverty by every social and economic indicator Africa is still the poorest region in the world. Why?
Yet, when we look at the shift towards more capital and private investment going into Africa, like 85 percent of the capital flow is now from a private sector, we're now seeing the kind of transformation that we have been hoping to see all along. We're now seeing job creation.
Now there is some concern with China. China recently replaced America as the largest trading partner with Africa. The Chinese are financing a lot of infrastructure projects which America has moved away from. But I think it's a healthy kind of competition.
CURNOW: And so it's a conversation, then, in a place like Milwaukee, perhaps, or even New York or even San Francisco. Are people saying, listen, the opportunities back home -- we've had such a tough time in the past few years -- are they looking towards Africa so far away to get them returns?
WHITFIELD: Yes. Now they are. They've finally realized that Africa has the highest returns on investment in the world. And we were so isolated from Africa for so long.
But I think now, with a lot of the African diaspora moving home, with Africa, you know, now taking charge of its own destinies, showing that they can conduct free and fair elections, making, investing in regional integration and the kind of incentives that would attract business, and also I think that the economic crisis forced American companies to look at other destinations.
And so the entire narrative has changed. No longer will you hear companies merely talking about Africa as a charity case and the poverty. They're now talking about mutually beneficial opportunities.
And those opportunities are being realized. Power is among the highest cost of doing business in Africa.
So if we can come in and partner with African governments and private sector to solve the power problem. And I think with American investors come a certain social entrepreneurship that when they come, largely they come with the concept of shared value.
And there's another phenomenon that the broader consumer base, they're now more -- they're more interested in where products are produced, how they are produced, will there be social transformation in that production process. And that's driving -- helping to drive business into Africa as well.
(END VIDEO CLIP)
CURNOW: Rosa Whitaker there. Remember, you can find us online at CNN.com/MarketplaceAfrica. I'm Robyn Curnow. Thanks so much for watching. Join us again next week on MARKETPLACE AFRICA.