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QUEST MEANS BUSINESS
Brazilian Government Convenes Special Meeting to Deal with Protests; Stock Volatility Examined
Aired June 21, 2013 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN HOST: Stocks started with a bounce and ended trounced, thank goodness it is Friday.
The Brazil backlash the government calls emergency meetings to deal with growing protests.
And drive on, plug in, swap out. Tesla drives to persuade users electric is convenient.
I'm Richard Quest. It may be a Friday, but of course, I still mean business.
QUEST: Good evening. The stock market's bout of biliousness shows no sign of ending yet. Investors are still suffering from a two-day hangover from Wednesday night and the Fed's guidance on QE was released. It continues to turn stomachs on the trading floor.
If you join me over in the library, you'll see just exactly what sort of a day it was and why Bernanke's comments saying that the tapering will begin or could begin this year and right into next. What you'll see exactly -- just look at this. It's all very grim at one level, the Dow Jones industrials currently; of course, it's been lurching in and out of the red.
The Dow is now just off 0.8 of 1 percent. So just down a bit. But bearing in mind it had a robust start to the session. The Nasdaq was pushed down by weaker Oracle results and the anticipation of this tapering of the bond market, this -- you bearing in mind the tapering only begins when the U.S. economy's growing. But we're already starting to see -- we've talked so much about this over the last 48 hours. If you look, U.S. Treasuries, they're now up at a yield of 2.5 percent. The Fed, through QE3, is the biggest buyer or one of the biggest buyers of U.S. government debt at the moment. It's the fear of what happens. Now you'll remember, of course, yield and price are inverse. So where one goes up, the other goes down and in the opposite direction. So that is why we're now seeing prices being pushed down, yields being pushed up.
And for many, of course, who have only seen prices rising, they're now suffering losses. Look at London, Frankfurt, Paris and Zurich. Heaviest losses came in the Paris market, up 1 point -- I beg your pardon -- the German market, 1.75 percent. It's all about less liquidity.
You've really got to look at Greece for what sort of a Friday it was, an enormously heavy selloff, the market down 6 percent and the reason that the Athens General fell so sharply, more political turmoil. One of the coalition partners has defected from the government in protest over the closure of ERTF, the Greek public television station.
Now the public administration minister's also handed in his notice and the totality of this, bearing in mind also that the troika has said that they are suspending part of the review of Greece, even though Greece has got money to pay the bills. Uncertainty is now back on the table.
(BEGIN VIDEO CLIP)
ANTONIS MANITAKIS, OUTGOING GREEK PUBLIC ADMINISTRATION MINISTER (through translator): After the decision by the Democratic Left to withdraw from the government coalition and to withdraw its ministers, I will submit my resignation to the prime minister today.
(END VIDEO CLIP)
QUEST: So that gives you an idea of the sort of taste of the markets and how that then transmitted itself through the rest of the world. Angela Merkel says the global market fallout shows that the economy isn't stable yet. She was speaking alongside the Russian President Vladimir Putin at a forum in St. Petersburg.
John Defterios joins me now from St. Petersburg.
John, am I right in assuming today you're in this very august company? You moderated the panel.
JOHN DEFTERIOS, CNN CORRESPONDENT: You are correct, with President Putin and Angela Merkel, Richard, we had about an hour and 40 minutes and about a half of that was spent on a Q&A session, which included plenty of opportunities to ask some very direct questions from me and from the floor, to be candid. We covered everything from supply weapons to the rebels in Syria to America's Super Bowl rings -- we'll get to that in a moment.
But going back to the market theme today, Richard, it's abundantly clear at the G8 meeting that President Obama and his economic team laid down the stones here for this transition of Federal Reserve board policy. I put the question to both President Putin and Angela Merkel about the market response and whether it was an overreaction or not. Let's listen to their candid answers.
VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): First, there needs to be a fundamental decision and Federal Reserve adjustment needs to happen at some point. It was not a surprise for us. I think it's a direct -- it's a decision going in the right direction. We need to get out of this situation which happened over the past years.
The debt burden of the overall budget needs to be reduced. Other debt obligations need to be reduced and President Obama spoke quite frankly about this during the G8 and I believe it's a healthy decision.
So I think that the reaction of the market was also to be expected. I think the adjustment of the policy will happen as soon as there is real awareness that American and international economy is being put on a healthy basis. That is only for the good.
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): The reactions show that we have not come back to full local balance because when you're talking about the sustainable growth in all world regions, and I would also mean that any announcements of central bankers should not cause this dramatic fluctuations and should not actually cause those price changes.
So Italy tells you how much that global economy depends on the action of central banks. And otherwise a calm and sustainable situation that obviously would not happen to that extent.
So that shouldn't stop us to return back to the normal and sustainable path of development.
DEFTERIOS: So, Richard, very clear here that both Chancellor Merkel and President Putin support this move of trying to start making that transition out from the very generous money. He was speaking about Greece today and the selloff that we had. I posed a question to Ms. Merkel as well about whether it's time to change the policy of austerity and start to readjust here so we can tackle that youth unemployment in the southern half of Europe. She said very candidly we're not competitive enough just yet. The readjustment is not finished yet. And although it is extremely painful, we should not finish the job until it is completely done which she suggests you could kick down, the can down the road for another few years but would boomerang on the European Union, and she didn't think that was the correct strategy, Richard.
QUEST: John, what is it like sitting opposite those particular two? Now come on, it's almost once in a career opportunity to actually have Merkel and Putin in front of you at the same time. What was it like?
DEFTERIOS: Well, it was actually a once-in-a-lifetime opportunity for sure, particularly as a journalist, to get that chance to pose questions, but what is very fascinating to be blunt here is the body language between the two, to see Vladimir Putin take the stage; he's as tough as he looks up close as he is from a distance, a great deal of personality. He's very forceful with his ideas, laid out a blueprint for Putin 2.0, Richard, because they've had very sluggish growth. So he wants to turn that around. They don't have the best relations between Russia and Germany, but they tried to turn that around today as well. And then watching Angela Merkel. She had prepared remarks, Richard, but when Vladimir Putin was speaking, she pulled out her note pad and wrote a whole final page for her speech there to give. And that was the real substance.
And then I was wondering, will they really be that candid when it comes to the question-and-answer and indeed they were. In fact, in Turkey, for example, Richard, there was a lot of discussion that Germany doesn't like to get involved in foreign policy. She thought that the response to the protests by Turkey was too grand. She said it was disproportionate and she said, "I don't want to preempt the German position, but we do have a degree of skepticism about the accession talks with Turkey." And that prompted a response from Ankara today. So there was a very candid discussion indeed.
QUEST: And finally, briefly, we also had -- we also had President Putin and this question of the NFL ring that he has supposedly pocketed or it was a gift.
Did it -- what happened on that one?
DEFTERIOS: Well, we posed the question to him; it happened in 2005. We were in St. Petersburg. Robert Kraft (ph), the owner of the New England Patriots, had the Super Bowl ring, apparently took it off and handed it to President Putin. He perhaps thought it was a gift. It didn't go back to Robert Kraft (ph). It's now in a museum here.
So I asked the president, how can we solve this international dilemma, what's his plan? What would be his solution? This is what he had to say.
(BEGIN VIDEO CLIP)
PUTIN (through translator): I don't recall that certain (inaudible) handed over. But there's such a big value for Mr. Kraft (ph) and for perspectives (ph). Things have a different (inaudible). I will -- I will ask our manufacturers to reproduce a really good visibly valuable thing made out of very good metal and stone in it and so that this object from generation to generation to be passed on within a team that is being represented by Mr. Kraft (ph).
(END VIDEO CLIP)
DEFTERIOS: So a lighter side to Vladimir Putin, but the bottom line, Richard, going back to his very steely approach, the ring is not going back, not the original, to Robert Kraft (ph). We'll make another one for him.
QUEST: And we all know what picture will be on your Christmas card this year, you and -- I'm looking forward to getting a signed copy. John Defterios, congratulations, John, very good work with those particular two.
Felicia Taylor is at the New York Stock Exchange.
Felicia, good evening to you.
FELICIA TAYLOR, CNN CORRESPONDENT: Good evening to you.
We're here at the New York Stock Exchange where reins has been fairly tight in today's trade, which isn't such a surprise after these last couple of days, where we've seen literally a 550-point drop. We've seen swings from about down 30 to up 40, pretty much all day long. But as one broker said to me, it's like over the last couple of days, we've taken the drunken sailor out of the marketplace. There are no fundamentals to trade on today specifically. So it's a very tight range-bound kind of a marketplace.
But it is on very significant volume in comparison to most other trading days, Richard.
QUEST: It is -- it's quadruple witching day. Bear with me while I do a bit of explanation on this. This is quadruple witching. It happens four times a year when four types of financial contracts expire. So for instance, we have already the stock index futures which will expire and they will go in. We also have stock index options. They will expire. These are the financial jewels, the gimmicks, the gadgets that traders use to hedge their bets.
We also have single stock futures expiring. And whenever this happens, it is always -- creates a volatility. Throw in single-stock options and you can start to see -- look. Ferment that is taking place in the market. This quadruple session is having an effect, Felicia.
TAYLOR: Double, double, toil and trouble. It certainly can create volatility. It usually adds to the volume in the marketplace. And that's exactly what you picked up on.
It is a high-volume kind of a day. The volatility hasn't really been there. I'm joined now by Mark Newton of Greywolf...
MARK NEWTON, GREYWOLF EXECUTION PARTNERS: Execution Partners.
TAYLOR: Thank you. That's a long title.
OK. So explain to me why this is such a significant day. It happens four times a year, March, June, September and December, always on the third Friday of the month.
Well, it's a simultaneous expiration of four different classes of options and futures contracts. And so to have that happen on all one day, as you mentioned, the typical year is a big increase in volume on days like today.
TAYLOR: But these are major players. I mean, this isn't for the faint-hearted. This is not for the individual investors. These kinds of contracts are large and are usually by major hedge funds and investors. And that's what creates the volume and the volatility.
NEWTON: That's true and it doesn't necessarily have to create more volatility. And that's sort of a misnomer. But oftentimes if the trend has been very volatile leading into days like this then it can serve to exacerbate the already heavy volatility that we've already seen.
TAYLOR: Why are these days important for the marketplace? What does it mark? I mean, it's tough to explain what these contracts are. I mean, it's sort of looking into the future. They don't all necessarily have to expire on the same day, though.
NEWTON: No, that's correct. It's simply important because typically, way back when, it was only two different classes of options and futures. And all of a sudden they've added another four different one. Hence the term quadruple witching. It's important because they all simply expire at the same day and some of them can be exercised; some of them can out worthless. You might be assigned on contracts. And so traders or investors really get to know where they stand on their existing positions on days like today after expiration. And you see whether these contracts have been closed out or not.
TAYLOR: Thanks, Mark.
So it's basically squaring your portfolio, whether or not you're able to make a profit on those kinds of trades. And that's why you see the added volume and volatility, Richard.
QUEST: Felicia Taylor in New York with double trouble.
After the break, Brazil returns to the situation in that country, where protesters win the battle of the bus fares. Now, of course, it's all out dispute (inaudible).
QUEST: Twenty-four hours after winning demands for cheaper bus fares and demonstrators in Brazil have a growing appetite for change. In Rio, Sao Paulo and other cities, anger at social injustice, corruption, poor health care, to say the least, it continues. And that's on top of the cost of the World Cup and the Olympics.
From Rio Matthew Chance reports.
MATTHEW CHANCE, CNN SR. INTL. CORRESPONDENT (voice-over): Not in 20 years has Brazil seen anything like this. From the capital to its biggest metropolis, vast crowds of protesters (inaudible) streets.
In Rio alone more than 300,000 people marched through the city Thursday demanding change.
CHANCE: Well, this is easily one of the biggest protests that has taken place in Brazil since these demonstrations began. You can see it's partly a victory parade (ph) (inaudible) the government here has U-turned on the initial issue, which was the rising (inaudible) fares. They've changed their mind and they've put those fares back down again.
This has also become something much broader, much more important.
CHANCE (voice-over): It's as if a catalog of grievances has been unleashed from official corruption to poor health care and education.
There's even anger at the money spent on preparations for the next World Cup, astonishing in a country so fanatical about football.
CHANCE: What are you here for?
UNIDENTIFIED MALE: Causes. It's so many causes that we've got to focus today, today is about these five causes.
CHANCE: You're focusing on five?
UNIDENTIFIED MALE: Five. Today is five causes. But it won't stop here. It won't stop now.
UNIDENTIFIED FEMALE: I'm protesting for the corruption, the health system, the transportation system, the education system --
CHANCE: So many issues.
UNIDENTIFIED FEMALE: Yes.
CHANCE (voice-over): And many Brazilians appear increasingly impatient with change. The capital, Brasilia, protesters tried to storm government offices for the second time this week. In Rio, riot police fought running battles with demonstrators to clear the streets.
And Brazil appears increasingly engulfed in turmoil -- Matthew Chance, CNN, Rio de Janeiro.
QUEST: And we'll be back after the break.
QUEST: Electric carmakers are on a mission to maneuver their way into the mainstream. And that means more speed.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Today it was Nissan that unveiled what it says is the world's fastest electric racer. The zero emission on demand racing car, or ZOD (inaudible) can reach speeds of more than 298 kph. That's fast. Nissan says it's twice as fast as current models.
(END VIDEO CLIP)
QUEST: And Tesla has sped up recharge time with a new battery swap system. For a fee its latest model can be back on the road within 90 seconds, a fifth of the time it takes to refill a car with conventional gas. Here's Tesla's chief exec, Elon Musk, speaking at the launch event in California.
ELON MUSK, CEO, TESLA: You have the choice of the supercharger, which is and always will be free. Or you have the choice of a battery pack swap, which is faster than you can fill a gas tank. So the only decision you need to make when you come to one of our Tesla stations is do you prefer faster or free?
UNIDENTIFIED MALE: We've got some extra time; let's do another one.
QUEST: As Musk mentioned, battery swap will cost up to $80 a time. Shares in Tesla roaring ahead. They've almost tripled in value this year. Tesla's one of Elon Musk's many successes from electric cars to putting people on Mars, a man of astronomical ambition as Maggie Lake discovered.
MAGGIE LAKE, CNN CORRESPONDENT (voice-over): Part rocket scientist, part billionaire, businessman Elon Musk has been called a superhero.
(BEGIN VIDEO CLIP, "IRON MAN")
UNIDENTIFIED FEMALE: You've been called the Da Vinci of our time. What do you say to that?
"TONY STARK": Absolutely ridiculous. I don't paint.
(END VIDEO CLIP, "IRON MAN")
LAKE (voice-over): Musk, the inspiration for billionaire Tony Stark in "Iron Man," has already transformed three industries. As cofounder of PayPal, he altered the way we shop online. He sold that company to eBay for more than a billion dollars and used the money to form SpaceX, a firm that now ferries supplies to the International Space Station and one day hopes to colonize Mars.
MUSK: It really shows that commercial space flight can be successful.
LAKE (voice-over): At 41, he's been compared to everyone from Thomas Edison to Apple founder Steve Jobs, begging comedian Jimmy Kimmel to ask.
JIMMY KIMMEL, ABC HOST: Why hasn't China kidnapped you yet?
LAKE (voice-over): But his most recent venture is proving to be his most controversial, the electric car Tesla has wowed the folks at "Consumer Reports."
UNIDENTIFIED MALE: This car performed better than any other car we have ever tested.
LAKE (voice-over): Tesla's stock is up nearly 200 percent year-to- date. Much of the rally came over Tesla announced a surprise quarterly profit and repaid a government loan early. But some worry expectations about the car and the man behind the car are running way too high.
BILL ALPERT, SR. EDITOR, "BARRON'S": So we looked at whether you want to pay $100 or more a share.
LAKE: And what was the answer you found?
ALPERT: We found it hard to rationalize $100 a share.
LAKE (voice-over): Investors are jumping on the Tesla bandwagon, but critics point out Tesla hasn't seen the sales to justify the share price.
ALPERT: Any stock that acquires a bit of a mania around it tends to go a little too far.
LAKE (voice-over): Adeo Ressi, Elon's close friend and college roommate says the debate is not surprising, given that Musk is shaking up the status quo.
ADEO RESSI, MUSK'S FRIEND: Elon once said on stage, you know, entrepreneurship is like eating broken glass and walking over hot coals at the same time.
An entrepreneur like Elon stays laser-focused on the objective. You know, they don't give up and they die trying.
LAKE (voice-over): Maggie Lake, CNN, New York.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Tonight's "Currency Conundrum," apart from Mexico, which other countries also use the peso? Argentina, Bolivia or Ecuador? Is it a trick question? The answer later in the program.
The dollar's up against the pound, the euro and the yen. It's a clean sweep for the greenback. Those are the rates, this is the break.
RICHARD QUEST, CNN HOST: 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.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Brazil's president has called an emergency cabinet meeting after a night of huge demonstrations. Dilma Rousseff's chief of staff says the government understands that the protests signal popular dissatisfaction. More than a million turned up nationwide on Thursday and in some areas clashing with the police.
More bodies are being found after flash floods in northern India. Officials confirm at least 550 people are dead and that number is expected to rise. Tens of thousands remain trapped in the Himalayan foothills, where entire towns have been submerged after early monsoon rains.
Syrian rebels say brotherly nations have shipped them weapons like these. The shipment is said to include antitank and anti-aircraft missiles. There is no sign the shipment came from the U.S., which recently said it would step up its support for the opposition.
Germany has blocked the next set of E.U. talks on admitting Turkey to the union. At an economic conference chaired by CNN's John Defterios, the German Chancellor Angela Merkel said that the way Turkey had responded to recent protests may not match European values.
Authorities in the Philippines have destroyed five tons of smuggled ivory tusks. Eight shipments worth around $4 million were seized from Kenya, Tanzania, Zambia and Uganda. The government estimates around 25,000 elephants are killed each for their ivory.
(END VIDEO CLIP)
QUEST: Nigeria has welcomed the G8 pledge this week to crack down on tax evasion and avoidance. At the week's summit meeting in Northern Ireland, the leaders signed their declaration calling on countries to tighten the rules. Stopping multinational companies shifting profits overseas, encouraging tax authorities to share information and urging mining companies to be more transparent.
That should help developed countries as well as the developing countries. Nigeria finance minister Ngozi Okonjo-Iweala told me these are not just issues for the developed or the developing world.
NGOZI OKONJO-IWEALA, NIGERIAN FINANCE MINISTER: This was seen as a developing country issue only in the past. Issues about tax, transfer pricing issues, debt to multinationals to pay their fair share of taxes, it was seen as something really a problem for developing countries. But now it's become universal. Tax evasion and tax avoidance, these were issues that we see mostly in developing countries or seemed to concern mainly developing countries --
QUEST: You want them paying tax to you?
OKONJO-IWEALA: No, we want them paying tax to us. We want -- when we are negotiating and making these investment agreements with companies that come to exploit natural resources, there is often an imbalance in terms of knowledge and information. They come with banks of lawyers and others with expert knowledge. And we need to build our own capacity to be able to negotiate the agreements that are favorable to us as well.
QUEST: Is Africa and is your country still paying the economic price and not being included as the rest of the world moves forward?
OKONJO-IWEALA: No, I think Africa is actually doing well. Sub- Saharan Africa is expected to grow at almost 6 percent which is far better than the growth rate you see in the developed world. So the perspective for the continent is good. However, as Africans, we are not completely complacent about this growth.
Why? Because it's not creating enough jobs.
We have --
QUEST: What more do you want? You've got 6 percent growth at a time when the Eurozone's in recession, the U.S. will grow at 1.8 percent and you're still saying you've not got enough job creation.
OKONJO-IWEALA: No, because youth unemployment in our country is very high. And the growth is coming with rising inequality. So it's a growth that has challenges that come with it. And we must address finding jobs, growing in a way that creates jobs for our youth. So we must look at sectors beyond natural resources, beyond commodities.
QUEST: The G8 is over. We've got the G20 at some point. G this, G that. I do sometimes think, Minister, it's all a bit of a waste of time.
OKONJO-IWEALA: Well, certainly it would be wonderful if global governance could open up and include many more countries. I think Nigeria is the largest country in Africa and --
QUEST: You want a seat at the table, don't you?
OKONJO-IWEALA: Why not? Why not, Richard? You know, I think that --
QUEST: Whose seat would you like?
OKONJO-IWEALA: No, our own. We don't want anybody's. We want our own because we firmly believe that Nigeria does well, Africa will do even better than it's doing now. And we are very conscious of that responsibility. But because of the weight of the country, we are 60 percent of West Africa's GDP. We are one in four sub-Saharan Africans is Nigerian. One in five Africans is Nigerian. So definitely we feel we need a seat at the table.
QUEST: And if she has her way, Ngozi Iweala will certainly get it.
After the break, (inaudible) tries to kickstart growth, Italy's trade chief says the country's ready for a fresh start.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The answer to tonight's "Currency Conundrum," which other country also uses the peso apart from Mexico? The answer: Argentina. But if you said Bolivia or Ecuador you were half right. They did use the peso once. They replaced them with newer currencies. Take 1.5 points if you got all of them correct.
(END VIDEO CLIP)
QUEST: Italy's prime minister has won a vote of confidence to round off a rocky week in parliament. It was the first time in Enrico Letta's government has faced a confidence motion. The prime minister has denied that the coalition's at risk from legal troubles facing Silvio Berlusconi. The former Italian leader now a coalition partner lost an appeal on Wednesday and now faces possible tax fraud convictions.
So in that scenario, Mr. Letta's only just week announced new measures to boost growth in Italy. I spoke to the head of the country's trade agency and asked him, look at Italy's economy. Is it -- I mean, clearly, it is fair to say the economy's under pressure.
RICCARDO MONTI, PRESIDENT, ITALIAN TRADE AGENCY: It is fair. But Italy this year will have about 100 billion euro of manufacturing surplus. So yes, our manufacturing sector is under pressure but has managed to export and it shows very strong competitiveness in many, many sectors. The (inaudible) is very diversified. So this is a good sign for our economy.
QUEST: The changes that are being brought in by the government are designed to make the Italian economy more competitive.
Has Italy become very uncompetitive in your view?
MONTI: Well, Italy is becoming more polarized between the sector that is not exposed to competition, that is shrinking and the second that is exposed to competition, to export that is actually growing. So the average does not exist. We have very good growth companies and very -- and suffering companies.
QUEST: So what do you want from government? What do you want in these reforms? What do exporters want?
MONTI: They want to have their life simpler and actually the (inaudible) government just in these days is working with a number of new simplification (ph), including something very, very easy to do, which is basically having international payor (inaudible) dealing only with three tribunals (ph), three course (ph), not 100 court (ph). So we're trying as a government to make life easier for the companies. And the other thing we need, we need more support in terms of financial support for export.
QUEST: You want banks (ph)? Banks or government support?
MONTI: Well --
QUEST: Credit guarantees?
MONTI: Yes, (inaudible) enforce that, you know, Italian companies have been suffering from higher cost of money, which is a key factor in --
QUEST: Everybody's suffering from a higher cost of money.
MONTI: Well --
QUEST: Except the Germans.
MONTI: -- well, some European countries would say they have been suffering more than our friends in the north part of Europe.
QUEST: Do you fear the Italian economy is in for an even greater shock, particularly bearing in mind there are still serious questions about the stability of the economy and the euro?
MONTI: No, for two reasons. One reason is we did already a very good pension reform. Italy's today is the most sustainable pension system than any other country in Europe. The second reason is that Italy did 100 billion euro of fiscal consolidation in (inaudible) --
QUEST: Under Monti?
MONTI: Yes, that is also the last part of the (inaudible) government and this government. So we're doing our homework. So I think we are ready to start again.
(END VIDEO CLIP)
QUEST: Our nightly conversation on business and economics, thank you to all parts of the world.
And our review of the weather forecast for the weekend ahead will take you to all parts, too. Jenny Harrison at the World Weather Center.
JENNY HARRISON, CNN METEOROLOGIST: Hello, Richard. Yes, I'm going to start with that, I'm afraid, very unsettled picture across in Europe, still very wet, quite windy as well across the northwest. We've seen one or two thunderstorms again across central Europe. And then we have the heat to contend with across those southeastern areas.
Now the rain and the thunderstorms, not quite as ferocious in the last 12 hours across the west, you can see them fizzling out across the North Sea. There's a new band of rain pushing in across the U.K. But again on Thursday, we did see some large hail reported in Germany, 5 cm. And in the Czech Republic, there's actually wind gusts of 97 kph that was reported. And we have the very heavy rain of 80 millimeters in Germany.
But this same weather pattern is going to continue. We've got high pressure, the jet stream in between (inaudible) this area of low pressure from pushing across into the central Europe is this very extensive area of high pressure. So this is the system bringing the cool weather and those strong winds and those showers.
Meanwhile, that big dome of high pressure, look at this for Friday, 37 Celsius. That was the high that was achieved in Budapest. So that is 12 degrees above the average, 10 degrees above in Sarajevo with a high of 33, Sofia at 32 and Prague, 27. That also a good 5 degrees above the average. So this is showing you the temperature trend over the next couple of days.
That warm air, it's still out there but being squeezed more across the southeast and unfortunately if that gets squeezed, it's cooler air is also filtering across into some of those central areas. So the temperature's beginning to come back down even in Budapest by Monday, 26 is the temperature. The average is 25 for this time of year.
And then in Sofia, it is coming down steadily, but 31 is the high temperature on Monday, 24 is the average. And we could see one or two thunderstorms coming in with that 31. So this is the picture unsettled. The next low pressure system coming through, quite a bit of cloud with that system.
But it's coming through really Friday into Saturday, sweeping the cloud across those western areas. And the (inaudible) temperatures, 16 in Paris on Saturday, 18 in London, but of course Monday is the day for this. It is Wimbledon. It begins and it should begin to a good start of weather, quite cloudy on Monday, patchy cloud on Tuesday and Wednesday and so all in all not too bad.
But of course we're always talking about the rain when it comes to Wimbledon. So I've got a bit of a question here. I'm going to pose it to Mr. Quest. Pay attention now.
In 135 years, yes, that is how many tournaments that have been going at Wimbledon, how many days have been completely rained off, Richard?
QUEST: Completely rained off?
QUEST: I would say 37.
HARRISON: Oh, not bad. Yes, well, you're pretty close. Here we go, 32.
HARRISON: Oh, yes, always a modest winner, aren't you? Yes.
QUEST: Thank you very much, total guess. Thank you very much, Jenny Harrison at the World Weather Center.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. And the program's from New York next week. Whatever you're up to in the hours ahead, I hope it's profitable.
ROBYN CURNOW, CNN HOST: From roads to sanitation to electricity, there's no doubt that infrastructure fuels growth. But here in Africa it sometimes feels as if growth happens in spite of the infrastructure, not because of it.
The World Bank estimates that the continent needs to invest nearly 100 billion U.S. dollars to bridge that infrastructure deficit. And one city is listening, Addis Ababa in Ethiopia is growing and growing fast.
CURNOW (voice-over): The constant hammering (inaudible).
CURNOW (voice-over): At times, it seems the entire city is under construction.
Ethiopia is in the midst of a 75 billion U.S. dollar five-year growth plan. Included in that plan infrastructure projects in and around Addis Ababa.
MATHEWOS BEKELE (PH), CITY PLANNER: The city's already more than 125 years old and we are going to change the existing situation of the neighbor (inaudible) in order to put in more infrastructure. Therefore, the main challenge will be in terms of redeveloping the existing built-up area.
CURNOW (voice-over): Once a private developer, Mathewos Bekele (ph) now heads up the city's planning office, an office that is quickly turning the maps covering its walls into construction projects on the ground.
BEKELE (PH): So you can see the transformation.
CURNOW (voice-over): Beatis Makata (ph) is Africa's largest open air market.
BEKELE (PH): Since we are expanding vertically we are creating more spaces. By creating more spaces, we'll be -- we are bringing in more (inaudible), for example, (inaudible), restaurants and transported spaces as well in Malaysia the spaces as well.
CURNOW (voice-over): Bekele (ph) says space in the city is becoming a premium.
BEKELE (PH): We'll be expecting around 5 million in the coming 10 years in the city of Addis and never in small towns surrounding the city. And we are expecting about 8 million in the coming 25 years.
CURNOW (voice-over): Addis' rapid population growth echoed across Africa, 41 percent of Africans live in cities and that number grows by 1 percent every two years.
Bekele's (ph) office plans to transform 50 percent of the city's slums into permanent housing complexes within a decade.
BEKELE (PH): In order to improve these slum areas in terms of the quality of the buildings, in terms of the quality of the infrastructure, (inaudible) and the facilities that (inaudible), we need to redevelop them and operate them.
CURNOW (voice-over): An ambitious target on a continent where the infrastructure deficit is well known.
And in its annual competitiveness report, the African Development Bank says a shortage of infrastructure reduces the continent's annual growth by at least 2 percent.
By spending just 5 percent of its total GDP on infrastructure, the bank estimates productivity could increase by up to 40 percent. A message heard loud and clear in Ethiopia's capital city.
CURNOW: Now helping to fund Addis' construction boom, China, the world second largest superpower continues to pour billions of dollars into Africa, but will it lead to self-sustaining growth?
CURNOW: Welcome back. Now China's a country that's experienced its own unparalleled economic transformation and it's helping to fund Africa's growth. Well, for this week's "Face Time" interview, I sit down with the Chinese special representative to Africa and ask him about lessons learned from China's spectacular rise.
ZHONG JIANHUA (PH), CHINA'S SPECIAL REP TO AFRICA: I can tell you a lot of things about what happened in China, what we have learned, what we experienced. And personally I think that probably for the last few years, when we tried to impress people that we are successful, which is open reform policy, we emphasized it too much on what we have achieved.
This is good because you need to prove you are successful. But I think a little bit things being ignored is how much have we paid for that. And if you are ignoring this -- the price you pay for this kind of success, and particularly for African countries, (inaudible) you Chinese have some tricks. Teach me the trick then I will be as rich as you are.
And then we (inaudible) ourselves. We look back, see. (Inaudible) yes, how we experience that. (inaudible) particularly the first 10 years, it was really tough and hard, so many (inaudible) factories go bankruptcy. Millions of workers have been (inaudible) unemployed (ph).
So probably we -- when we introduce our (inaudible) to African countries, on one side, we need to say what you should do and need to do and probably on the other side we should emphasize what you could expect.
CURNOW: So from the point of view of your experience, of the sacrifices you know that need to be made to achieve Chinese-like growth, do you think Africans, African leaders are ready, are willing, are able to make those sacrifices? Do you see (inaudible)?
JIANHUA (PH): I will not answer on their behalf. I'd rather let them answer that. But we can contribute is to hear with what we have experienced. This could possibly happen anywhere if you want to have a reform. I think African country, if they want reform the structure of the economy, want to come forward and become developed, it's kind of challenging (inaudible) will come to them sooner or later.
CURNOW: China in many ways is part of this revolution, this reform in Africa. A relationship that is becoming incredibly more criticized. The central bank governor, for example, in Nigeria, saying China's relationship with Africa, whiffs of colonialism.
JIANHUA (PH): I fully understand him. I think he has the reason to be anxious. Sometimes be angry. But I see that don't jump to the conclusion so easily. Colonialism is a heavy word. When I think about colonialism, I think about the sixth sense of bearer of (inaudible) this continent. Leave this continent with (inaudible).
But now what happening is changing this whole continent because with the commodity, trade with the world, it can generate its own development, generate its own foundations for infrastructure. This is the change. It's happening. But I really admired the governor for his courage to say his article (ph) that we need to compete with China.
This is something I see as a very wide point in his article because I think eventually African people should be confident enough to stand up, to compete with any country of the world. Without that kind of competition, African can never (inaudible).
And I always say that there's no losing this competition. Everyone benefit from this kind of competition because this competition means development. So I think the same thing will happen in Africa. I'm glad to see that. Our opportunity is to help them to compete with us, to help them to win this competition. That's the future. It's called a win-win situation.
CURNOW: So what does China want from Africa?
JIANHUA (PH): We want a more prosperous world. Without that, China cannot develop itself. (Inaudible) more prosperous world means leave this continent out of poverty. We repeat what happened in China, we repeat what happened in China benefits Africa. And China itself will also benefit from that.
CURNOW: But Chinese strategy is to benefit China.
JIANHUA (PH): If you don't want to let other people benefit from this kind of development, you will eventually be losing yourself. This Chinese philosophy: don't do something you do not do for yourself. You want to win, you want to have your benefit and (inaudible) safeguard, (inaudible) better see other people can benefit from (inaudible).
CURNOW: There's been criticism that China's taking out all of Africa's natural resources and then flooding it with cheap manufactured goods.
JIANHUA (PH): (Inaudible).
CURNOW: It's the same thing over and over again. But I think very many Africans are very sensitive to this relationship, even more so than (inaudible) year before. Africans feel like this relationship is unequal.
JIANHUA (PH): We are also sensitive. What you mean by equal? When you sold the world the oil with 6 cents a barrel, I saw that as unequal. But when you start to have this benefit from harsh, much, much higher price of the commodity and save the money for ourselves, (inaudible) people, but have the base to develop ourselves and have a equal opportunity for the future.
You think this is not good? You want to still go back to those days with 6 cents a barrel? I don't believe that. And you will not talk to African leaders ,most of them notice, this is the difference. This is the good opportunity we are not having. We don't want to lose it.
CURNOW: From China in Africa to the world's other superpower, next week we focus on American interests in Africa as Barack Obama, the U.S. president, visits Senegal, Tanzania and South Africa. Until then, I'm Robyn Curnow. See you next week.