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Calm in Cairo at Present, Following Violent Clashes; Examining US Jobs Report

Aired July 5, 2013 - 14:00:00   ET


RICHARD QUEST, CNN HOST (voice-over): A deadly new phase in Egypt, violence in Cairo as the Muslim Brotherhood now shows its own defiance.

The taper draws closer. U.S. job creation marches on towards an end to Fed stimulus.

And Samsung falls short. The iPhone is not as deadly as it seems.

I'm Richard Quest. It may be Friday and, of course, I still mean business.

QUEST: Good evening. We will have a roundup of the day's business news of course, including those important job numbers and how the market reacted. That's all coming in a moment or three.

Of course, we must begin with the events in Egypt today and this evening where violence returned to Cairo after the military coup which was meant to end it. Supporters of the ousted president Mohammed Morsy are massing in Tahrir Square and they're calling for him to be restored to power. At least two people have been killed and dozens injured in clashes across the city.

Becky Anderson joins us now from Cairo.

And it has been one of those days where momentum has built throughout the day, Becky, and now the crowds are also building.

BECKY ANDERSON, CNN HOST: That's right. You're absolutely right. When the heat goes out of the day, you get more people on the streets at these demonstrations. I just have to correct you. The behind me is Tahrir Square, and that is where the -- what you might now call pro-military, anti-Morsy demonstrators have been gathering.

And they are now -- we're beginning to see much bigger crowds. As we have seen of late in the evening here at Tahrir Square, in other parts of town, the pro-Morsy demonstrators have been gathering after Friday prayers.

And today at one of those venues, the arrival and speech made by the supreme guide of the Muslim Brotherhood now, I want to point out why that - - or explain at least -- why that is important. This is a man who it was reported had been rounded up in what has been a sort of crackdown on the Muslim Brotherhood since the military intervened here.

He appeared as if by magic today. (Inaudible) not still detained and (inaudible) to his constituency which are pro-Morsy supporters, not just the Muslim Brotherhood but many others who have gathered to oppose the military in (inaudible) elected government (ph).

We made a number of very interesting remarks, not least he says that today we must bring back Morsy. He's the legitimate president of his country. He said we will sacrifice ourselves for him. He said our peaceful protests will be stronger than bullets and tanks. We will end this military rule, the military coup, he said, is illegal, illegal, illegal.

He also talked to the army of Egypt here now. You'd expect those who were supporters of Egypt's deposed (ph) president to be real foes of the military. (Inaudible) today and who knows what his motivation for these words were at this point. But he said to the army of Egypt, protect all Egyptians. Do not be biased against one group of people.

Lift your heads high, he said, Richard. That was a line that was used (inaudible) today, as it were, from the revolutionary peer (ph) of the 2011 movement, which had deposed the former Hosni Mubarak regime.

So lot of sort of fast-moving events, not least to my right now, the October the 6th Bridge. It's one of the bridges that goes over the Nile. We have seen Molotov cocktails been thrown. And outside state TV there, there was a very, very big protest between believed is turning violent, and I can't observe it from here, but we know there is serious activity there tonight.

And there's again, that after President Morsy was deposed, the military closed down Morsy's or the pro-Morsy television channels. They were situated to my right and there was a big pro-Morsy gathering there tonight.

I hope that doesn't sound too complicated, because it has been a fast- moving day of events. I think the overarching point is Morsy's supporters are going nowhere. They are hitting the streets in protests. They're going to public squares all over the country and you've still got a big crowd here.

QUEST: Becky, the question listening to the Muslim Brotherhood, this very delicate fine line between still calling for democratic restoration of Morsy but at the same time non-violence. And yet the factions that will be hotheaded enough to want to take to the street with violent intent, where's the -- where's the fine line at the moment tonight?

ANDERSON: Well, and that -- it's a really good question, and there's not one either I can answer or anybody can answer. So I don't (inaudible) across Egypt tonight. But let's sort of, you know, give you a broad brush here.

What's happening at the political table is a very polarized picture and it is important at this point and there are promises being made by everyone here, the military, the opposition, everybody involved in what is this new political scene, that it will be an inclusive one.

But what is happening on the street could be something very, very different. (Inaudible) sense that, you know, whatever happens at the political table, I think needs to happen really quickly. They can't wait six months, a year, to get this (inaudible) new interim president. They've got to get -- they've got to make some decisions about what's going to happen next very quickly.

But what's happening on the street here could be entirely different because it could become very, very antagonistic. Let's find out exactly what is going on or what has been going on right in the heart of things today.

Ben Wedeman is on the line, because I believe, Ben, you're driving through the city, but you been down today at a big rally which was demonstrating about the deposition (inaudible) getting rid of (inaudible) the democratically elected president.

Just describe what you saw and heard.

BEN WEDEMAN, CNN CORRESPONDENT: What we saw, Becky, was a very large crowd of people who were extremely angry over the fact that the men, most of them, voted for a year (inaudible) Mohammed Morsy as president is now essentially gone (inaudible).


ANDERSON: Not communicating with (inaudible) maybe we are, and I just can't hear it.

Have we -- have we got Ben?

All right. I'm going to assume that we haven't, because I can't hear Ben at the moment. Let's reestablish it then if and when we can. But I can tell you that he's driving through the city at the moment back from one of the very big demonstrations.

One of the points that Ben was making to me earlier on is those who he spoke to today were not Muslim Brotherhood supporters, not just the Brotherhood supporters or supporters of the Freedom and Justice Party. They were Egyptians who were out protesting the demise of Mohammed Morsy and his government.

OK, I believe that we can hear Ben, so let's try again.


WEDEMAN: Yes. At this moment we're driving through part of Cairo with -- in a great big market where everything looks absolutely normal. But we've come from the University of Cairo where there were 10,000 probably more people have come out to protest the ousting of (inaudible) just a year ago elected as president of Egypt.

And I think you're seeing now is this crisis really coming to a head, people thought that after the huge numbers of protesters out in Tahrir Square, after the military came out and announced that Mohammed Morsy was no longer president, that that was the end of the story.

But this may just be the beginning of the story. I think it's important even though all this violence is taking place in various parts of Cairo with four people killed outside the Republican Guard headquarters and other (inaudible) clashes (ph) in Upper Egypt and the Delta, what's important to understand is this is the way the Muslim Brotherhood shows and the Freedom and Justice Party, its political wing.

This is how they show that they have numbers as well. They can mobilize tens of thousands, hundreds of thousands, perhaps millions of people to come out and this is something they've always been good at, going back to the days of Hosni Mubarak.

I remember covering some of the secular political opposition parties, then could maybe field 100,200, 300 people. The Brotherhood, when they decided to field, to mobilize their masses, they could bring out tens of thousands of people.

And so it's a whole different equation from what we saw, the celebrations in Tahrir Square. Right now the political struggle is underway and it shows no sign of stopping, Becky.

QUEST: And -- it's Richard here, Ben. The -- very interesting what you're saying here. It doesn't see likely that the side that gets the upper hand now is really the side that has the staying power because clearly if we continue with this stalemate of massive demonstrations on both sides, Egypt falls further into the abyss.

So it's he who keeps going longest that perhaps wins the day.

WEDEMAN: Perhaps. But I think everybody's making a point now. The people in Tahrir Square and those behind them, they made their point. They made their point on the 3rd of June, the 4th of June and now it's time for the other side.

There's supporters of Mohammed Morsy who aren't all members of the Muslim Brotherhood to make (inaudible). And I think General Sisi and Interim President Adly Mansour are watching carefully, well aware that you cannot marginalize. You can't push out. You can't cancel the role of the Muslim Brotherhood and their supporters and their Freedom and Justice Party in Egyptian politics.

To marginalize them would be a catastrophe. They may moderate their position. They -- as time goes on, they may discard some of the more extreme things. They'd become (inaudible) among many other Egyptians. But they -- I think that the people in power in Egypt are probably going to come to the realization that the Muslim Brotherhood and their political wing are here to stay.

QUEST: Ben Wedeman, who is in Cairo for us this evening, along with the team coverage, Becky Anderson, Ivan Watson, our correspondents, are across the region covering this story. And we'll continue to do so in the hours ahead.

There's been a reaction from the investment community. Fitch downgraded Egypt's sovereign rating from B to B- and the outlook is negative, which suggests there will be a further ratings downgrade. You don't need to me to say the political instability is the risk and that could delay reforms, which are necessary for an IMF loan.

No one expects Egypt to be balancing the books. The question is whether or not there is sufficient reform to justify the IMF opening their wallet.

Coming up, the numbers are good. Investors aren't buying. The latest U.S. jobs report -- and it had a fickle response on Wall Street. QUEST MEANS BUSINESS. Good evening.



QUEST: Job creation and the U.S. labor market is gaining momentum; 195,000 jobs were created in June and that was far more than expected. The CNNMoney projected around 155,000. So that's a very robust gain. And if 195,000 is one number, look at this one.

If you look at the average job creation since January, you see it is now 202,000. So when that went -- we're not at the level at which it makes serious inroads to unemployment, which remained at 7.6, but we are at the position where what some would say is the tipping balance, a self-momentum is created.

And of course, the more -- well, look at how the market reacted to this particular number. The Dow is now up 120 points, a strong session and a robust response to that.

There had always been the fear, of course, that this strong jobs number would cause the market to tank because better economic growth means the Fed would taper off its QE3 and its bond purchases and would no longer be buying $85 billion a month.

Alison Kosik is at the New York Stock Exchange.

And let's put this into perspective. It's a quiet day. I can see it's a quiet day with it being the day after July 4th.

But Alison, here's the point: the market seems to now have digested what might happen and is taking a more realistic view of these numbers.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Oh, exactly. And it's all about the improving data that you just gave out. The numbers, really, you just look at the average, the average number of jobs created since the beginning of January, 202,000. You know what that shows?

It shows that we could be on track to really breaking two years of stagnation pretty much. In the labor market, so you see there, that average of 202,000, that's really good momentum. And when you see the market up like this today, true, it is on a thin trading day; not many investors in the game today.

But we are seeing the market hold onto -- hold onto those gains because the thinking is look, the Fed said that if the data improves, we're going to go ahead and cut the worry initially why is that, the timing wouldn't be favorable to the market.

Well, guess what? Today the market is realizing that the data could be just what we need to see and for investors to actually be on board with the Fed to go ahead and pay for that stimulus, Richard.

QUEST: Right. So all -- would you say that exactly the fears of tapering, that after Bernanke's comment after the FOMC that caused such volatility, that has now gone away as the realization, the tapering's coming and actually it is good news because it means the economy's doing better?

KOSIK: I do agree with that, yes. I think that fear is going away. And here's why, because you're seeing even the revisions are moving up higher. As April's jobs numbers are better, May's jobs number came in better as well.

So now the expectation is, well, if those two numbers were revised higher for a total of an extra 70,000 positions, then June's number sitting at 195,000 today, as we know it, the thinking is that could be revised higher as well, because that really seems to be the trend. The trend seems to be on improvement, Richard.

QUEST: Alison Kosik at the New York Stock Exchange, the Dow Jones, as I said, is over 100 points. But if you need proof of what the market thinks, look at the other side of the equation. And there's particularly the price of gold. Gold has -- I want you to look at this. Now gold, of course, we've had a very sharp run-up in the price of gold last year.

Then at 20-odd percent for over the last few months. And then look at the time, and the time's really quite interesting. Look at that, that sharp drop today when we got that job numbers and that is simply because the -- the gold is down about 2 percent. It suggests a slowing -- that things are getting better, the Fed will start pulling back and economies are growing.

And of course -- so gold is one side, because what happens is gold falls when the dollar rises; the dollar rises when there's the prospect of higher interest rates. And that's exactly what we saw in terms of the U.S. Treasury yield. It's all interlinked.

I cannot stress this enough. But this, of course, is a worrying thing. Remember, I say it's all interlinked. But to have such a big shift from here to here, which is starting to get roughly a 23 percent gain in the 10-year bonds increase from the lows to the highs, that, of course, could have a very serious effect if it slowed the economy down.

Remember everything is to some extent interlinked, one way or another.

The Fed says the tapering process may begin in the autumn if favorable signs continue. Bond yields are continuing to rise. I spoke to John Silvia, the chief economist for Wells Fargo, and asked him if the job gains that we've seen, the 195,000, is it sustainable?


JOHN SILVIA, CHIEF ECONOMIST, WELLS FARGO: I think these job gains are sustainable; certainly, 190,000-plus is doable.

I also like a couple of other things that we see. The job gains are broad-based. I think that is very, very important. When you look at the average work week, we do see some improvement in the manufacturing sector.

And you do see jobless claims coming down. The Institute for Supply Non-Manufacturing Survey, employment index was up. This seems to be a lot of corroborating evidence that the job gains are sustainable going forward.

QUEST: And the dollar, the dollar has rallied sharply against both the euro during the week and certainly the pound; gold, of course, being the opposite side of that equation, has fallen.

Would you expect to see further dollar gains?

SILVIA: I do expect further dollar gains for two basic reasons. One, I think expectations for economic growth have improved in the United States and I think we'll see that in some of the surveys over the next few weeks.

And then second of all, with the tapering process, it's more than likely that interest rates will be rising in the United States compared to, for example, just yesterday, when Draghi was talking about further easing from the ECB point of view.

So both better economic growth, higher interest rates. I think that will sustain dollar improvement going forward.

QUEST: OK, I'm going to -- I don't want to end on a down note, but I do need to point out, of course, we need to briefly put in perspective if you look at the 10-year bond and you look at the rise, it --


QUEST: -- and you look at the rise in the yield, now since May, since the beginning of May, the yield has risen by about 20-odd percent. All right, from a low-level to a not-so-low level of 2.4 whatever.

But that is a sizable rise, which eventually will take its toll.

SILVIA: Well, the sizable rise in 10-year yields, especially since, again, there are benchmarks to other types of financing, mortgages, corporate bonds will take their toll on the U.S. economy. And so when we talk about the economy improving, let's say from 1.5 percent growth or so in the second quarter, to maybe 2 percent, 2.25 percent in the third quarter, we're not talking about 3 percent GDP.

So there is a negative impact here. And in fact, it's reinforced by the stronger dollar that's having an impact on our exports. So the dollar and interest rate increases are both going to have a toll on the U.S. economy that will moderate the strength of the economy going forward. But it is sustainable growth, probably around 2 percent, 2.25 percent.


QUEST (voice-over): Tonight's "Currency Conundrum," the British or the U.K. Royal Mint is issuing newly made silver pennies to children. But who gets these new silver pennies? Are they children born on the Queen's official birthday? Born on Churchill's birthday? Or the royal baby's birthday? The answer after the break.




QUEST (voice-over): The answer to tonight's "Currency Conundrum," the Royal Mint is issuing silver pennies to children born on which day? The Queen's official, Churchill's birthday or the royal baby's birthday? And the answer of course is the royal baby's birthday.

The mint is producing exactly 2,013, 2,013 of those silver pennies to commemorate the impending royal birth of the Duke and Duchess of Cambridge, who are expecting their first child this month. Now because of a change in law, and the change in one day the he or the she will be Britain's monarch, whichever sex.

I asked the Royal Mint's Shane Bissett, who came up with this splendid idea of these pennies, and how does it work for parents-to-be?


SHANE BISSETT, THE ROYAL MINT: Well, obviously the birth of the royal baby will be a joyous occasion, not just for the Duke and Duchess of Cambridge, but for the nation as a whole.

However, it's a very special day for the mothers and fathers across the country that will be having a baby on the same day. At the Royal Mint, we want to make the day even more special by gifting a lucky silver penny to the parents of the baby.

QUEST: Two hundred thirty -- 2,013 of them, I believe, you have got.

What if there are more babies than that? Will you be minting some more? It would be a shame if you were the 2,014th to apply.

BISSETT: Well, on average, there's just less than 2,000 babies born in the U.K. on any given day. But we have limited this to 2,013 baby packs. So we would urge parents to actually engage with us on as soon as they possibly can.

QUEST: Why do you think, sir, finally, it's necessary for the mint to be relevant? You have a duty in terms of the production of coinage. So there is a responsibility there to start with. I mean, that ain't going to go away. Why do you need to expand your remit in this way, do you think?

BISSETT: Well, I suppose as an organization that's over 1,000 years old, we obviously need to continuously change to keep ourselves relevant. But from the research that we've done, people see the coins as used in traditional ways and means and in terms of traditions.

And we do know that people gift coins to mark phrase (ph) to give the moments that arrive, whether it's a birth, the Tooth Fairy or a wedding or even at the starting of building a house. It -- a tradition has been to place a coin under the first brick.


QUEST: And to prove how modern the mint has become, you don't need to apply by post or by email. You apply on their Facebook page.

Ahead on QUEST MEANS BUSINESS, we return to the situation in Egypt.



RICHARD QUEST, CNN HOST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN and, on this network, the news always comes first.

Now CNN has learned that two police officers have been killed in a drive-by shooting at a police station in Arish, the capital of Egypt's North Sinai province.


QUEST (voice-over): Now at the same time in Cairo, there have been clashes between supporters and the opponents of the deposed Egyptian president, Mohammed Morsy.

Molotov cocktails have been thrown at the exit ramp of the October the 6th Bridge in central Cairo. Meanwhile, Nile TV is reporting that the Muslim Brotherhood's Freedom and Justice Party chief and its deputy have been released by the police.

CNN has learned that the former South African President Nelson Mandela has been receiving kidney dialysis. The court document shows Mandela's family was considering removing his life support last week. The 94-year old remains in hospital and is described as critical but stable.

The Vatican has announced that the late Pope John Paul II is to be made a saint. His progression to sainthood is the fastest in modern time. A second pope, John XXIII, will also be canonized later in the year.

France is running the same type of spying program used in the United States. The French daily newspaper, "Le Monde," is reporting. The paper says the country's external intelligence agency runs a vast electronic surveillance operation, tapping citizens' phone calls, emails and Internet activity.

Novak Djokovic is through to the men's final at Wimbledon. (Inaudible) Juan Martin del Potro by three sets to two in four hours and 43 minutes. It's the longest Wimbledon semifinal ever played. Djokovic will now face the winner of the second semifinal between Andy Murray and Jerzy Janowicz.


QUEST: Our main story tonight, of course, is the events or are the events in Cairo and what is happening. And we take you straight there now.

Karl Penhaul is there and joins me on the line.

KARL PENHAUL, CNN CORRESPONDENT: Richard, Friday prayers has provided a rallying point for the supporters of deposed President Mohammed Morsy. After prayers ended, thousands of his supporters took to the streets in Cairo. I want to tell you now a report we prepared a short while earlier.


PENHAUL: This is the barbed wire separating soldiers from now thousands of supporters at President Mohammed Morsy. (Inaudible) this building; it's the headquarters of the Republican Guard. This is where we believe that the deposed president is still being held, where he is under arrest by the Armed Forces.

The military now are on standby; there are also elements of police there. And we understand that a while ago, police opened fire with tear gas into the crowds and also (inaudible) in the crowds are showing us (inaudible) that they say were fired into the crowds.

We have had reports from the health ministry that at least one person was killed by gunfire and they said that that person was a supporter of President Morsy.

Now this crowd here, which about numbered a thousand, have been gathering since the end of Friday prayers. They streamed out of mosques and various parts of the city. They congregated and marched here to Republican Guard headquarters.

At the moment, as you can see, the military is holding back and the crowds are also appealing for calm. Time to time we can hear chants go up from the crowd. The military, Egyptians, we are all brothers. (Inaudible) unclear how long they will be able to do that.


PENHAUL: Night has now fallen in Cairo and just a few moments ago, that peace was still holding between supporters of President Morsy and the military outside the Republican Guard HQ.

There has been no repeat of the shooting incident earlier on in the day, but the health ministry has confirmed that at least one demonstrator was killed and others were wounded in that shooting incident.

But there's no sign that supporters of Mr. Morsy are heading home anytime soon. We heard during Friday prayers a sermon calling for supporters to go from martyrdom, to sacrifice even their lives to rescue the deposed president.

And outside the Republican Guard HQ, certainly some of his supporters there say that they will not leave without the president. So we've just got to see how that develops through the night, Richard.

QUEST: That fragility of peace, Karl, talk to me about that. And bearing in mind that some of the Muslim Brotherhood are saying, you know, by all means go and protest; we're not going to move them to squares. We're not going to move from outside the palace. But it will be peaceful.

But then there are those radicalized elements that will take no -- that will not miss any opportunity to basically turn this violent.

How fragile do you believe it is?

PENHAUL: Well, I'll tell you something, Richard. We were at Friday prayers at the Cairo University campus. And I would not describe the crowd there as radical by any stretch of the imagination. In fact, only a minority declared themselves being members of the Muslim Brotherhood.

Many others said that, yes, they were Muslims; yes, they were Islamists. But they didn't -- they weren't members of the Brotherhood itself.

We talked to web developers (ph). We talked to computer engineers. We talked to the manager of a (inaudible) company, many of them fathers of families.

And as the sermon was going on, some of them were (inaudible) weeping because the man who was giving the sermon, the preacher, if you like, he was calling on them, asking them to offer themselves up as martyrs and talking to some of these young men after, they said to me, they said, look, I don't want to die.

I want to resolve this by peaceful matters. He said, what is at stake here beyond religion is my principles, they said, and they said that (inaudible) our principle is democracy. We want the president back because we've democratically elected him.

And then after telling me that, one man turned to me and he said, "And, please, if after you've interviewed me on camera, if I die tonight, please could you show this video to my wife and to my four children? I want them to understand what I've been doing here today." He said they're deeply frightened for me, he says, "but I am (inaudible)."


PENHAUL: "We can't turn back. We have to do this."

I don't get the sense, Richard, that these are outright radicals looking for a fight. But certainly these are people who believe that they elected their president and they want him back, no question about that.

QUEST: Right. But hang on, Karl. Let me jump in there, Karl, because the argument from the other side that you know better than I do is that Morsy basically went beyond his mandate. We're now looking at live pictures of the October the 6th Bridge, where Molotov cocktails were thrown earlier in the evening at traffic that was leaving the highway there.

But, Karl, back to my question: his supporters surely have to deal with this fact that Morsy lost the support of the -- basically the large number of people. I do believe we've lost Karl Penhaul; we will try to get him back. It's the nature of the -- of the beast this evening, a combination of getting the correspondent speaking to them, then there's issues of communications.

The pictures you're looking at are from the October the 6th Bridge. That was where Molotov cocktails -- and as Karl was explaining the tinder box and environment where the Muslim Brotherhood, some are suggesting, who protest with your lives whilst others are saying this will be a large but peaceful protest.

Either way, two pictures tonight for you out of Cairo, two sets of demonstrations currently taking place, one, of course for the pro-Morsy demonstrators, those who want to see him back in power, and of course those who are against, who are celebrating the fact that he has --

Karl -- I believe we've got Karl pale (ph).

Karl, before I launch into a long question, are you there, Karl?

PENHAUL: Yes, I'm here again, Richard; sorry, we're driving through Cairo now. And if you can imagine, the signal is dropping in and out. But yes, we're back with you now.

QUEST: No apology needed.

Karl, quickly, the pro-Morsy supporters, do they accept in any shape, form or description that he went beyond his mandate as the -- as the opponents now believe and say it was time for him to go?

PENHAUL: Talking to some of those supporters today, they do say that, yes, they do believe that Mr. Morsy made some mistakes. What they also would argue is that they don't believe that the opposition allowed President Morsy to govern. They say that that anti-Morsy sentiment was whipped up by private TV channels.

And they also say that those business interests that weren't (inaudible) with the Muslim Brotherhood or with Islamist parties then set about divesting from (inaudible) economy and so they feel that really Mr. Morsy wasn't given a fair chance, rather than believing that he overstepped his mandate. But they say, yes, that mistakes were made.

That's part of democracy, they say, that a president sometimes does make mistakes. He's not always popular. But that those (inaudible) can be rectified in a democratic manner. They also say it's fine for people to go out on the streets and protest.

That's part of democracy grassroots democracy, if you like, but they say what they cannot accept is that then those people engaged in that kind of grassroots democracy then call on the military and the military step in to give (inaudible) democratically elected president 48 hours to shape up or ship out and then essentially roll tanks and armored personnel carriers out onto the streets, Richard.

QUEST: Karl Penhaul, who is in Cairo this evening, we thank you for that, Karl. Continue obviously the reporting as we now come to an end this evening.

(Inaudible) the pictures, you can see there's the pro-Morsy rally on one side of your screen. The pictures from the October the 6th or the 6th October Bridge on the other side.

Demonstrations taking place, the Muslim Brotherhood continuing to express their vehement opposition, some members, deputy director and deputy directors of the Muslim Brotherhood have been released by the Armed Forces. It's still believed that Mohammed Morsy himself is incarcerated, under arrest by the Republican Guard and waiting for the details on that.

But tonight in Cairo, the demonstrators on both sides remain entrenched in their positions and entrenched on the streets. I'm Richard Quest. That's QUEST MEANS BUSINESS for tonight. We will (inaudible) developments extremely closely in the hours ahead, because the news never stops, neither do we. This is CNN.




ROBYN CURNOW, CNN HOST: Welcome to MARKETPLACE AFRICA, I'm Robyn Curnow. Now southwest of San Francisco Bay, Silicon Valley has long been known as a breeding ground for tech startups. Now through sheer determination, will and a trance meeting in Rio de Janeiro, three young Ghanaians have added their names to the list.



CURNOW (voice-over): Meet three of Ghana's brightest tech minds.

In just over two years, David Osei, Philips Effah and Kamil Nabong have taken their web-based startup companies, Dropifi, from the classroom in Ghana to California's technology capital, Silicon Valley.

DAVID OSEI, CEO, DROPIFI: Actually, I'm in a matter of moving to the valley as soon as this because basically we want to build a global setup company right from Ghana. And that is going to service the whole world. By coming to the valley, it's definitely a step ahead of what we imagined.

CURNOW (voice-over): It's a dream come true for the young techies. The standard Dropifi in 2011 at the Meltwater Entrepreneurial School for Technology in Accra. While at the school, the team entered as the Accra Startup Weekend, a competition for entrepreneurs.

PHILIPS EFFAH, CFO, DROPIFI: So David approached me and said this is the idea. He realized that businesses lose a lot of information online because of these long and scary (inaudible) form. Then I realized that, yes, it's a huge potential for it.

CURNOW (voice-over): The idea became Dropifi, an online tool that helps businesses solve customer feedback sent through a company's website. The tool analyzes demographics, industry trends and emotions behind the messages, which can help companies better understand and respond more effectively to customers.

KAMIL NABONG, BUSINESS MANAGER, DROPIFI: So if business logs into their Dropifi account, the first page they see --


QUEST: Good evening, I'm Richard Quest at CNN in London. And now we bring you breaking news, showing you the events.

This is the pictures of the October the 6th Bridge in Cairo tonight, one of the main crossings, where there have been serious Molotov cocktails that have been thrown in recent hours. And now we are getting reports of skirmishes and outbreaks of sporadic violence. You're looking at obviously pictures of the melee and the milling around.

It is Friday evening in Cairo and that is the start of the weekend. And what we have seen during the course of the last few hours, are very large numbers of protesters on both sides that have been gathering. First of all, we have the pro-Morsy protesters, of which we saw earlier in Karl Penhaul's report outside the Republican Guard, where Mr. Morsy is believed to be being held.

And then, of course, in Tahrir Square, large numbers of anti-Morsy protesters, where there have been pretty much nonstop every evening over the last week. And you can see now the two pictures, the pro- and anti- at the moment.

The running clashes are erupting all over according to various reports, as supporters and opponents do battle. There's also the sound of gunfire, which could be heard as two sides are hurling rocks at each other. The local hospitals and the health ministry has reported that it, too, has received people who have been -- who have been injured by shot -- by shotguns.

The Muslim Brotherhood's Freedom and Justice Party chief Saad El- Katatni and the party deputy, who were arrested, have been released according to the Egyptian state broadcaster, Nile TV, which reported.

And most important of all, of course, we have heard from one of the leaders. We've heard from one of the leaders of the Muslim Brotherhood, who is now basically saying -- who's now basically saying that they're calling on people not to accept what it's describing as the illegal takeover by the military. Some are calling for a less than -- some are calling -- I'm choosing my words carefully to get it right.

Some are saying that this must be defended with their lives. Others are calling, of course, for non-violent protests. But the call remains tonight, the leaders of the Muslim Brotherhood and the spokesman of the Muslim Brotherhood is saying that they do not accept the removal of Morsy. They will not accept his removal and they are continuing for a dialogue with the Armed Forces.

CNN has learned that two police officers have been killed in a drive- by shooting at a police station in Arish in the capital of Egypt's North Sinai province. In Cairo, there have been clashes between supporters and opponents of Morsy. Molotov cocktails were thrown at an exit ramp on the October the 6th Bridge in the center of the city.

Meanwhile, Nile TV is reporting the Muslim Brotherhood's Freedom and Justice Party and its deputy have been released by the police.

So that's the situation we have in Cairo for you this evening as we continue to watch the events.

What everybody seems to agree now is not that there's a stalemate, but that there has to be an accommodation. Morsy may have been removed by the -- by the military, but what we've seen today in the tens of thousands, perhaps hundreds of thousands, are those pro-Morsy supporters coming out.

And they are not as, according to our Ben Wedeman, Karl Penhaul and other correspondents -- those people are not just, if you like, the Muslim Brotherhood faithful who would turn up in any event. Instead, there is a core of supporters who voted for Morsy -- remember, he did get 51.7 percent of the popular vote in the election.

And those are the people whereas the Muslim Brotherhood maybe would be 20 percent to 30 percent normally. Those are the people who are now coming out in the last 24 hours and saying well, hang on a second, he did win this election fair and square. He has been removed. And that's not fair and that's not democratic.

And that's the situation in Cairo tonight.

Karl Penhaul describes this fragility of the peace. But at the same time recognizing that it's more than just a numbers game, of who gets the most protesters on the street.

Ben Wedeman is on the line now.

Ben, these sporadic items of protest that we are seeing, they -- it is a bit of argy-bargy? Or is it something more serious?

BEN WEDEMAN, CNN CORRESPONDENT: (Inaudible) well, it does seem to be something more serious. What we have -- I'm just at one end, a little bit further away from one end of the October 6th Bridge over the Nile. This is normally Friday night would be filled with cars. Right now it's empty; there's a burning car in the middle of this.

At one end of the bridge are supporters of the deposed President Mohammed Morsy, trying to cross over on this side where I am, just off of Tahrir Square, there's a large crowd of people gathered around ambulances and with some people are being injured. It's hard to tell. So it doesn't look by live ammunition, but by birdshot and stones.

There are frequently military helicopters flying overhead. But there doesn't seem to be any real security presence in the area, not army, not police. It's a very confusing situation. It's dark and nobody really knows (inaudible) where I'm standing exactly what is going on. This is something that even for Egyptians accustomed to all the --


QUEST: Right. Now --

WEDEMAN: -- (inaudible) and find it a little hard to deal with, Richard.

QUEST: OK. Let me jump in there, because that's -- I think, Ben, you have probably just elegantly and eloquently as always put your finger on the situation tonight. Nobody knows really what's going on.

So in that scenario, Ben, when you have Mohammed Badie (ph) of the Muslim Brotherhood, supreme guy, describing the -- and I want to get the quotes right again -- describing it as "illegal acts to remove" and it won't stand and "our bare chest will beat the bullets."

What do we make of that?

WEDEMAN: Well, I think that given the unprecedented nature of some of this violence in Cairo that there's a very good possibility that at some point, perhaps even this evening, that we're going to see army tanks in the streets. This is the kind of street battles that we haven't seen since the revolution.

And in terms of (inaudible) paralysis of the capital, it's not just (inaudible) many parts of the city where traffic is blocked, makeshift groups of young men with clubs have set up roadblocks in various areas, stopping cars from going through. You have large concerns of people from the two different sides in this uproar.

Large numbers of them very emotional, very highly charged and nobody (inaudible). But certainly the army has said in the past it would step in if there's massive, large-scale bloodshed, if there's large-scale disorder. And this looks like the beginning perhaps of exactly that, Richard.

QUEST: And yet, not that (inaudible) suspected would do much good, but Mohammed Badie (ph) did call upon the military and the army not to fire on its own people.

When we saw those pictures earlier, when Badie (ph) was speaking and, of course, army helicopters were flying overhead as he was speaking, allowing the protest to go ahead, but at the same time monitoring it. And you have the brotherhood appealing to the army not to fire on their own people, Ben.

Well, there we have -- we seem to have lost Ben Wedeman there, which will give me a moment or two to regroup and recap on the situation that we have for you tonight.

Cairo is somewhat in chaos. CNN has learned two police officers have been killed in a drive-by shooting at a police station in Arish in the capital, Egypt's North Sinai province.

In the city itself, large-scale demonstrations on both sides and tonight now clashes of demonstrations between the various parties as Molotov cocktails were thrown onto the ramp of the October the 6th Bridge in central Cairo.

Nile TV is reporting that the Muslim Brotherhood's Freedom and Justice Party chief and its deputy have been released by the authorities, by the army. Morsy himself is still being held in captivity, believed to be by the Republican Guard barracks. And of course, now the sound, reported sound of gunfire in the capital.

That's the situation in Cairo tonight. You've been watching CNN's continuing coverage of the pro-Morsy demonstration, the anti-Morsy demonstration and the way in which the situation appears to be deteriorating this evening, because the news never stops. This is CNN.