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QUEST MEANS BUSINESS
SAC Capital Pleads Not Guilty; US Stocks Tumble; Global Outlook; "Whatever It Takes" One Year On; Eurozone Crisis; Europe Stocks Down; New Bank of England Deputy Governor; US Considering Scrapping $1 Bills; Dollar Lower; Church of England Invested in Wonga; Cisse Seesaws
Aired July 26, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, HOST: Tonight, SAC pleads not guilty. Wall Street's biggest hedge fund denies insider trading charges.
Wonga investment. The Church of England is embarrassed over its links to the payday lender.
And just as Facebook charms investors, why a study says that it might be getting its users down.
Hello, I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.
Good evening. SAC Capital is heading for an epic court battle with the US government after denying all charges of fraud. The hedge fund pleaded not guilty at a pretrial hearing in New York. That was after US attorneys accused it of the biggest insider trading scam in history.
Let's go over to Felicia Taylor, who's in New York following all these developments. So, Felicia, they're going after the company, but also its assets, which are owned by Steven A. Cohen.
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: Yes, this is the crux of the conversation. And this all surrounds what they're calling "unprecedented insider trading scheme." Now, that means that the government has to prove that there was willful intent to engage in insider trading.
TAYLOR: But what's the definition of insider trading? That's a fine line as to the way traders and portfolio managers may have obtained information. Let's take a listen to Ralph Silva, who runs a research firm out of Toronto onto what exactly that fine line can mean.
(BEGIN VIDEO CLIP)
RALPH SILVA, DIRECTOR, SILVA RESEARCH NETWORK: Insider trading in much smaller level happens on a daily basis. People hear things when they're going out for a bagel, they just hear things, and they react to these things. Management doesn't always know all the interactions that their traders or analysts are doing. As a result, they can't necessarily manage this.
But what's unprecedented with this case is that it is a criminal case, not a regular regulatory case, where just a small fine or maybe some type of exclusion was happening. And all the contacts that I've been talking to over the past 24 hours in New York, they're running scared.
(END VIDEO CLIP)
TAYLOR: Question is, did these individuals willfully, knowingly get non-public, material information or was it just sort of innocuous conversation that may have happened, as Ralph Silva pointed out, possibly at a coffee shop or over a dinner table or they just witnessed something happening.
It's a very difficult thing to prove, especially on a criminal level. The point is, though, is that Preet Bharara, who is the US attorney in the Southern District Court of New York, is going after this hedge fund in particular because it is so high-profile.
That has to scare a number of other hedge fund industry portfolio managers or heads of hedge fund out there, because they're very serious about cracking down on insider trading. Earlier, we spoke to John Coffee of Columbia University, who has has take on how this might affect a small portion of the industry.
(BEGIN VIDEO CLIP)
JOHN COFFEE, PROFESSOR, COLUMBIA LAW SCHOOL: This will send some shockwaves through that portion of the hedge fund community that tries to beat the market by acquiring market-making news. That's a small portion of the total hedge fund community, which is largely quantitative in their orientation.
But of those people, this means they've got to watch out. They've got to take diligence and compliance seriously. Mr. Cohen was sort of evading that, it appears. So, I think we will see a significant change in behavior in the world of fast-trading hedge funds.
(END VIDEO CLIP)
TAYLOR: In other words, more compliance, more transparency. Obviously, not everybody in the hedge fund industry engages in this kind of alleged illegal activity.
But you know, what's really interesting about this case, Nina, is not only are they discussing insider trading, but they've also issued charges of money laundering. That is something that we haven't necessarily heard before that is associated with this kind of trading.
And how do you get from insider trading to money laundering? The way the US attorney has done this is by saying that because those funds allegedly were received and profitable off of insider trading, which is obviously illegal, and then those funds were funneled back into what were perfectly legitimate funds, all of the funds are then tainted.
And that's how they can go after the money laundering, and that could lead to the seizing of all of Steve Cohen's assets. That includes his house, his art collection, and other property that he may own, which I believe he has in Florida and also in the Hamptons, which is in Long Island, the eastern part of Long Island.
So, there's a number of different reasons why this could be an enormous problem for him. Not only is it going to cost him potentially hundreds of millions of dollars, possibly even billions, but they could go after all of his assets, and therefore, his business will shut down.
DOS SANTOS: Yes, $9.3 billion, that's an awful lot at stake, and a lot of that personal fortune, as you were just saying, Felicia, is wound up also in SAC Capital. Joining us from New York, Felicia Taylor this evening, thanks for that.
Now, US stocks look like they're heading for losses on this week's trading. Take a look at the big board behind me. It's the second or third day that this market has been in the red after reaching another set of record highs earlier on in the week.
The Dow is off by, as you can see here, almost around about 50 points at the moment. It was up -- down around about twice that amount in points terms earlier on in this session. It has managed to recover, as you can see. It's only down around about a third of one percent.
But as we've said, we've had a series of disappointing earnings coming out from some of the big bellwethers in the United States, particularly in the tech world, like Amazon and Expedia. We'll have more on those in a moment's time.
But all of this has painted a bit of a mixed corporate picture, and the economic news has been more positive. However, one measure of consumer confidence in the United States did come in at its highest level in six years.
As I was saying, though, really, what people are looking for is the statements that are coming out of some of these companies further down the line about what they expect to happen in the world's largest economy.
Well, it's been a big week for second quarter results as the earnings season begins to eventually wind down, that'll offer some relief to the likes of Alison Kosik, who's been following all the action at the New York Stock Exchange and joins us now, live, with more. Alison?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Oh, no, no, no. I love the action, Nina. But it is a pretty light day on the earnings calendar today. We are watching shares of Zynga, right now, plunge 14 percent. Expedia shares, they're falling even more, 25 percent down after their disappointing results last night.
But the reporting period overall has been going OK. Almost half of S&P 500 companies have reported so far, and Thomson Reuters says 68 percent have topped profit forecasts, 56 percent have beat on sale. It kind of helped the market, really, churn steadily higher.
But the question is, will they help economic growth, and what about the global outlook going forward? I talked with David Cote, he's the CEO of Honeywell. I talked to him yesterday. The industrial giant is erring on the side of caution when it comes to its forecasts.
(BEGIN VIDEO CLIP)
DAVID COTE, CEO, HONEYWELL: The way we're going to look at the world economy going forward is for the next three years, the US grows at 2 percent, Europe grows at zero, India grows around 4, China grows 6 to 7. So, we're going to stay on the more conservative side.
(END VIDEO CLIP)
KOSIK: And that Honeywell outlook for the US is a bit more bearish than the Fed, which is expecting about 3.2 percent GDP growth by 2015. Now, I also asked him what the biggest hurdle is for the global recovery.
(BEGIN VIDEO CLIP)
COTE: The biggest headwind -- progress as a company is just what's happening on the global economy, and the biggest impediment to the global economy is debt. You take a look at the world's big democracies -- Japan, the EU, India, the US -- they're all paralyzed by debt right now.
And until they actually -- all four actually take the actions that they need to, which Japan is just starting to, we're going to stay like this, and we've got to address it.
(END VIDEO CLIP)
KOSIK: And Cote also said that two things that would be key for the US would be a smart debt deal and to produce more of our own oil and gas, but that those things are tough, too, because, Nina, they result in a lot of arguments among lawmakers. Nina?
DOS SANTOS: Yes, they certainly do. Alison Kosik joining us at the New York Stock Exchange. Have a great weekend, there.
KOSIK: You, too.
DOS SANTOS: Thanks for wrapping up the earnings.
Now, he promised to do whatever it takes and swore it would be enough. Mario Draghi's famous speech in London is now a year old. Next up, we look at its real effect on the eurozone crisis.
DOS SANTOS: Hello and welcome back. Well, Greece has finally won approval for the latest round of bailout money that it's set to get, and it's a fitting day for this to actually occur, because you may remember just a year ago in London today, this man, Mario Draghi, the head of the ECB, made a game-changing speech.
And this is what he said on the subject of the eurozone. He said, "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro." And he goes on to say, as you can see here, "Believe me, it will be enough."
Three months later, it turns out, though, Draghi's bond-buying plan, which is what he unveiled at the time, called Outright Monetary Transactions, or OMT for short, turns out to be quite successful, even though it's a policy that he never actually really used, it has been quite effective, according to the ECB president Mario Draghi himself.
(BEGIN VIDEO CLIP)
MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: Frankly, when you look at the data, it's really very hard not to state that OMTs been, probably, the most successful monetary policy measure undertaken in recent times.
(END VIDEO CLIP)
DOS SANTOS: Even if it hasn't actually been undertaken. That's the point we should make. Now, Draghi points to the stock market performance that we've seen of late as a sign of a kind of policy success here. Let's have a look at how it's performed.
As you can see, here, this is the FTSE Eurotop 100 index, which shows a cross-section of European shares. Since Draghi actually promised to do whatever it takes, I was saying, about a year ago, well, this index has actually gained some 12 percent over the course of that period, with some pretty sizable peaks along the way, as you can see, all the way back in May, which is when it reached its year high.
Let's have a look at how this has affected the currencies, notably, the single currency. And as you can see, this is a chart of the euro dollar. The euro's actually strengthened, it's up about 9.5 percent against the US dollar over the same time frame we're talking about.
But the real pressure point was, of course, the bond market across the eurozone, wasn't it? And borrowing costs have fallen as Draghi had predicted himself. He's called the drop "spectacular" in his own words.
Spanish bond yields, as you can see here, about a year ago were pushing the 7 percent mark. That was that sort of unsustainable danger zone that priced many European countries out of the bond market and into bailout territory.
As you can see, they've come right down and they're trading closer to around about 4.5 percent. Now, for the Spanish yield and the Italian bonds have also been falling to more sustainable levels, which is good news, because it means these countries can issue bonds on the outright market and it becomes more affordable for them to do so.
Let's bring in David Marsh, here, who's the author of "Europe's Deadlock: How the Euro Crisis Could Be Solved, But Also How It Probably Won't Be." He joins us now, live from our studio in CNN London. Great to have you on the show David.
DAVID MARSH, AUTHOR, "EUROPE'S DEADLOCK": Hi.
DOS SANTOS: You've talked about this sort of -- we should set up some kind of council to have a look at exactly how policymakers responded to the eurozone crisis, notably the ECB. How would that help?
MARSH: I think having a look at all the faults that were committed and the sins that we undertook over the last, say, 20 years would be quite helpful because if you analyze the mistakes in the past, it might help you to avoid the mistakes in the future.
But I think that's probably not the main priority at the moment. As you were saying, we have had this announcement a year ago. It has caused a certain amount of calm on the markets. Unfortunately, it's not helped the economy, the underlying economy.
As we know, we've had six quarters of recession in the euro area. We are getting out of that now. But I think a lot of time has been bought, and the governments haven't done an awful lot with it.
I think the main problems that Europe has, how to bring about growth, are still with us, and we are going to see, I think, a severe tightening of conditions next year because there will be a little bit of extra inflation in the system.
DOS SANTOS: Yes.
MARSH: The American economy is doing better. It's going to be very difficult, I think, for the euro to carry on in this, what I call a kind of phony war which we've had. We are going to have also colossal Greek debt restructuring next year. So, this could be the calm before the storm.
DOS SANTOS: Well, that's the whole point, really, isn't it? Have these countries really learned that they shouldn't need these Outright Monetary Transactions from Mario Draghi if, of course, they manage to get their borrowing in check.
MARSH: Well, it was very clever, because Mr. Draghi was suggesting that the central bank could do something. It's not been totally agreed, the Germans are against it. But I think everybody's willing to go along with this idea. It's like nuclear deterrence, really. The fact that it's not been used doesn't mean it hasn't been successful.
The problem is that countries like Greece and to a certain extent Portugal and Spain are doing a great deal to get their houses in order, but they're running very hard just in order to stand still because there's no growth. Their debt keeps going up, because you see, the interest rate that they're paying on their debt is still very high.
DOS SANTOS: Yes, it certainly is. And the point is is if that starts to rise again for other regions, not just eurozone regions -- say we had another global financial crisis -- these countries would need those OMTs, as Mario Draghi puts it. Do you think we'll ever see him really deploy that kind of arsenal during his tenure at ECB?
MARSH: I think it's less likely. I think some kind of emergency action could be taken, but don't forget, he hedged in with all sorts of conditions. He said "within our mandate," so it has to be in line with the ECB's anti-inflation mandate.
And also, if a country was to apply for the OMT, it would have to also undertake another commitment to bring in even more austerity. And I think it would be very difficult to agree even more austerity these days.
I also think the fundamental problem, which is a kind of low-level belligerency between creditors and debtors in the euro area, which is what I've been drawing attention to, that's really unlikely to go away.
The creditors have been getting unforgiving, and the debtors are getting pretty resentful. And so, that's not a very good cocktail to bring about any thorough growing program. This is why I think the euro crisis will continue, but the euro will not collapse. It'll be just like a long- running civil war rather like in an Orwellian time of his novel "1984."
DOS SANTOS: All right, David Marsh --
MARSH: Not particularly -- confidence-inspiring, but not a complete catastrophe.
DOS SANTOS: I was about to say, that's a very cheery quote for a Friday evening. Thank you very much for that. David Marsh, there, the author of "Europe's Deadlock: How the Euro Crisis Could Be Solved But Also Why It Won't Happen," joining us in our London studio, there.
Now, let's have a look at how this has affected European markets because, as you can see, European stock markets actually finished with further losses for the best part, with the exception, as you can see there, of the CAC 40 over there.
They finished down on the week, as I was saying, with the exception of the French stock market. That in turn was boosted by the luxury group LBMH -- LBMH, this is the maker of Dom Perignon champagne, also Louis Vuitton handbags.
It reported quite a bit of a second -- strong second quarter earnings that finished up more than 3.5 percent in that particular stock, and that moved the markets, as you can expect, in Paris.
Otherwise, it was something of a cautious note on these markets while, of course, they await policymakers at the Federal Reserve, which will be meeting next week. The big question is, will they taper back on that big round of quantitative easing we've seen for so long?
Now, speaking of central banks, the Bank of England has chosen a new deputy governor, and this is the man himself, John Cunliffe, as you can see there. He's going to be Mark Carney's number two. He's going to be in charge of financial stability.
He was a close advisor here to the former British prime minister Gordon Brown right at the height of the financial crisis. He's currently the UK's top diplomat to the European Union.
He's going to be replacing Paul Tucker, who was passed over for the top job as governor of the Bank of England in favor of Mark Carney. So, that's John Cunliffe, who's going to be joining the Bank of England there as deputy governor.
Of course, the push to scrap entirely the $1 bill in the United States has intensified. We were telling you about this on QUEST MEANS BUSINESS yesterday.
A report released this week says that the switch to $1 coins could actually save taxpayers around about $13.8 billion over the course of the next 30 years to come. It does say that while the notes are cheaper to produce, a coin lasts quite a bit longer and they don't need replacing quite as often.
Which brings me to our Currency Conundrum this evening. The lifespan of a $1 bill in the US is nearly 5 years. So, how long does a coin actually last? Is it A, 10 years? B, 20 years? Or C, 30 years? We'll have the answer for you later on throughout the course of the show.
The dollar is virtually flat against the pound, while the euro's edging a little bit lower against the Japanese yen. We'll be back with more after this.
DOS SANTOS: If you watched last night's show, you might remember that the Church of England had made a promise to put the payday lender Wonga out of business. Well today, it's emerged since that the church is actually already invested in it, if indirectly. Let's have a look at the money trail here.
After the Church of England's $8 billion investment pot, what it did was it invested around about $116,000 into Accel Partners, this is a US venture capital firm. And Accel, it turns out, has actually invested in companies like Facebook, Spotify, and guess what? Yes. Wonga.
The Archbishop of Canterbury, Justin Welby, said that this shouldn't have happened. But it does go to show that it's not easy to keep track of exactly where your money's going when you make these investments.
Let's cross over to London now and to Stephen Hine, who's head of Responsible Investment and Development at Eiris, which is a research organization founded by churches and charities to investigate ethical policies. Great to have on on the show, Stephen.
STEPHEN HINE, HEAD OF RESPONSIBILE INVESTMENT AND DEVELPMENT, EIRIS: Thank you.
DOS SANTOS: First of all, what do you make about this Church of England and Wonga business? If you take a look at it, it's not a huge amount of money, and they did give it to somebody else who in turn invested in it, but it must leave them red-faced.
HINE: Well, it's certainly true to say that their involvement in Wonga is indirect and, in fact, the church's policy of investing or not investing in payday lenders would suggest that it has to be a 25 percent involvement of a direct investment, as far as I understand it. Obviously, the investigation is ongoing.
So, to that extent, it probably just actually breached the precise principles of their guidelines, and as such, and more importantly in a sense, if the church and many churches and many retail funds, even many pension funds, do take part in responsible and ethical investing.
DOS SANTOS: But what does this really mean in terms of sort of keeping an eye on your investments? Because I suppose if you take a look at some of these US venture capital firms and venture capital firms right around the world, they are investing on a huge number of small start-up businesses. And it's quite difficult to keep track on where they're going to be putting that money.
HINE: Well, that's true, but some of the venture capital firms do have sort of top-level polices amongst the partners themselves that they may choose to abide by particular principles. It wouldn't necessarily be avoiding payday lenders, necessarily, but it may be a look to ensure the companies are managing their environmental and social risks appropriately.
So, it kind of depends how you work, and of course, the Church of England, alongside many investors, may be exposed to companies in a particular way, but they also have huge holdings and equities, et cetera, where they've also applied quite strict policy.
DOS SANTOS: Yes, of course, the Church of England has an absolutely gargantuan portfolio of property and other investments around the world. And it's its job to get the best return for that money as possible.
So, how do you couch that with managing to invest ethically? Because you're obviously the head of ethical investments there at Eiris. It must be quite difficult to determine what is ethical. There must be dimensions of unethical business being done in many businesses that might on the surface seem ethical.
HINE: Well, at Eiris, we wouldn't say that there is such a thing as perfectly all-white companies, so to speak, as you might put it. Purer than pure. Lots of different investors apply different sorts of criteria. Some are applying screening criteria, because they wish to avoid certain things which fall afoul of their particular principles or concerns or those to whom they're offering mutual funds.
But others may wish to speak to companies about how well they're managing environmental issues, human rights. Say, for example, the Rana Plaza fire in Bangladesh, investors writing to companies asking them to abide by a set of principles.
So, it isn't all so very straightforward thing, and different investors have different concerns for different reasons. And increasingly, many investors feel that if you don't take into account environmental and social issues when investing, you may be exposed to companies which will not manage the risks of the future as well as they should do.
DOS SANTOS: OK, Stephen Hine, there, head of responsible investment at Eiris, the charity. The organization is founded by churches and charities across the UK to investigate these ethical policies. Thank you so much for joining us in our London studio this evening.
HINE: Thank you.
DOS SANTOS: Well, let's continue with this subject, because Wonga's got one other reason to be cheerful today, not just because obviously the Church of England has been left red-faced in its debacle with them, Newcastle United Senegalese striker Papiss Cisse says that he will now wear Wonga's shirt next season.
The lenders paying out about $37 million to replace Virgin Money as the club sponsor. Cisse said originally that the fact that Wonga was on the shirt clashed with his Muslim faith, because of course, Sharia law forbids profiting from money lending.
But then he backtracked after getting some spiritual guidance. Cisse's moral stance was also undermined just last week -- or earlier this week, I should say -- when of course a picture came to light which appeared to show him present at a casino.
Now, to mark the end of the fighting in the Korean War, CNN has been getting a glimpse inside the country shrouded in secrecy. We'll compare North Korea with its southern neighbor after the break.
DOS SANTOS: Hello and welcome back, I'm Nina Dos Santos. These are the top stories we're following for you here on CNN.
Thousands of people are demonstrating in support of the military in Cairo's Tahrir Square. Egypt's army chief has called for the rally to counter what he calls "terrorism." A second rally in support of the ousted president Mohamed Morsy is happening in the Nasr City district of Cairo.
Parts of the train that derailed and smashed into a wall in Spain are now being hauled away. And in the meantime, the driver of that train has been placed under guard in the hospital where he's currently recovering. Police say he's being investigated for a possible crime. At least 78 people were killed as a result of that incident.
There's been a double bombing in northwestern Pakistan, about 15 kilometers away from the Afghan border. Reports say that the explosions ripped through a busy marketplace as shoppers were stocking up to break the Ramadan fast. Police say at least 41 people were killed and dozens more were wounded. No one has claimed responsibility.
Media reports say that Dominique Strauss-Kahn will face trial on pimping charges. Investigators in France have determined that the former head of the IMF should be tried in connection with an alleged prostitution ring in the French city of Lille. Strauss-Kahn has admitted to attending sex parties there but says that he didn't know the women present were prostitutes.
And in other news, Pope Francis is telling young Catholics to honor the elderly on what is Grandparents' Day in Brazil. The pope has been greeting crowd as he continues to visit this country. He also spoke privately with convicts and gave an address there. He's in Rio de Janeiro for the World Youth Day celebration.
(END VIDEO CLIP)
DOS SANTOS: In Switzerland the hunt is continuing for two inmates who escaped from a prison with a pair of armed accomplices. According to police, one of them is part of a criminal network of jewel thieves as the Pink Panthers. Let's go over to CNN's Matthew Chance, who's been following this story. He joins us now live from London.
Matthew, the Pink Panthers -- tell us all about them.
MATTHEW CHANCE, CNN SR. INTL. CORRESPONDENT: Well, they're a fascinating group of organized criminals that have most of their membership in the former Yugoslavia, particularly in Serbia and in Montenegro. That's according to Interpol, which has a whole investigation trying to bring the various strands of the robberies that this group have committed together and to investigate them.
They're -- it's apparently a loosely affiliated group of, as I say, organized criminals that focus on jewel theft internationally.
It's estimated by Interpol they've stole somewhere in the region of $400 million worth of jewels since 1999, when they basically came on the scene and started to monopolize the targeting of sort of high-end jewelry stores in Europe, the Middle East, Asia and even the United States as well.
So they're a very successful group, loosely affiliated, as I say, and one of their members, a guy called Milan Poparic (sic), who was a Bosnian national, was amongst the two people, one of the two people who escaped from that Swiss jail in a very daring sort of prison break that took place on Thursday.
So get another indication of how this gang and its members are continuing to foil police efforts, not just to stop them from carrying out robberies, but also to sort of keep them behind bars. So really fascinating story.
DOS SANTOS: Yes, certainly sounds like there was an inside job (inaudible) obviously begs the question, what are Swiss authorities and Interpol at large trying to do to apprehend these criminals?
CHANCE: Well, in the immediate aftermath of the prison break, they're doing everything they can. I mean, it was very difficult for the prison guards to stop the prison break taking place. The two accomplices that came from outside used a van to ram the gates.
They used ladders to scale the barbed wire fences, and then they had automatic weapons and they opened fire, firing many, many shots at the prison guards inside the prison itself, essentially providing cover for the escapees.
A French police -- a Swiss police spokesman, rather, has come out and said, you know, under those circumstances, with so many bullets flying around, the prison guards simply aren't equipped to cope with that kind of situation. So they had to let the escape go ahead.
There's been a full-scale police search launched in Switzerland and across the border in France as well, where it's suspected that the escapees may have fled to. But because of the open nature of the borders across Europe, I mean, it's anybody's guess where they could be right now.
And as I mentioned, there's a whole network of support for these people; they're highly organized, particularly members of the Pink Panther gang. They're highly organized and so this individual could quite literally disappear from the radar.
DOS SANTOS: OK, Matthew Chance in London for us this hour, thanks for that.
Now Facebook (inaudible) great moments, doesn't it? But researchers say that (inaudible) making your friends feel worse about themselves. Up next, a look at special network envy.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Now let's bring you the answer to tonight's "Currency Conundrum." Earlier in the show, you may remember I asked you how long does the U.S. $1 coin actually last in circulation?
Well, the answer (inaudible) 30 years. Compare that with the U.S. dollar bill, which lasts less than five years (inaudible) campaign to say that minting the more durable coins for U.S. dollars would actually slash the cost (inaudible) those notes worth billions and billions of dollars.
(END VIDEO CLIP)
DOS SANTOS: Shares of Facebook are currently on the slide after Thursday's dramatic jump of more than 30 percent. Investors have managed to pile in or at least they did earlier on in the week, as you can see by that spike on the chart there, into the social networking site after we saw a big rise in mobile sales contributing to better than expected revenue figures for the social networking site.
Well, of course, it came out with its figures earlier on in the week. The stock market surge sent the founder, Mark Zuckerberg's personal fortune soaring to get that $3.7 billion in just one day. Forbes now estimates that its fortune is around about $16.1 billion in terms of its net worth.
But as we've said before, it can go up and it could go down. So obviously that figure changes depending on the value of Facebook stock.
Well, the fortunes of Facebook are certainly looking up these days. But according to one study, spending too much time on the social network could actually leave you feeling rather down. Research compiled by two German universities says that constant scrolling on this site could trigger what they call social envy and feelings of isolation and even depression.
Hanna Krasnova led that particular study. She's with the Humboldt University of Berlin and joins us now live, as you can see, via Skype.
Hanna, I suppose we've all been guilty of where members of Facebook and have a Facebook page of a little bit of Facebook voyeurism. But is it really make us that miserable?
HANNA KRASNOVA, HUMBOLDT UNIVERSITY OF BERLIN: Well, yes, it can make you -- a person miserable indeed. That's what our study shows. So we tried to understand what users (inaudible) on Facebook and we saw that actually envy is not that rare.
In fact, 20 percent of envy incidents which our users experienced (inaudible) by Facebook. And this is not a small number, if you think about all different situations and all different (inaudible) which we face right now.
And what we found was that the more we use Facebook passively (ph) and so the more information you just consume on Facebook about others, about your friends, the more you tend to envy, and this feeling can provoke drop in life satisfaction, feelings of emotional exhaustion, emotional drain. But it can also make you (inaudible) yourself even more.
KRASNOVA: (Inaudible) this kind of envy spiral.
DOS SANTOS: And, Hanna, it also makes you present yourself in a completely different way than you'd present yourself in person if those people were really your friends that you saw on a day-to-day basis. That's part of the issue, isn't it, is that people post rather superficial things that, of course, make them look good on Facebook.
KRASNOVA: Right. Of course, people (inaudible) post negative things about themselves. (Inaudible). And they will try to present ourselves in the best light possible. And also this actually (inaudible) envy feeling can also trigger this reaction, because envy is something which takes us some out of balance. And we want to restore this balance.
And stop presenting one's self -- it's kind of like self-information (ph). So that could also be sort of a dynamics which it taking place on Facebook.
And the danger is, of course, that the more users do it, so the more the sort of envy spiral develops, so the more self-represent ourself (sic) better and better and better, the more the world of Facebook sort of, you know, gets (inaudible) attached and removed from the reality. And then it makes us kind of more miserable.
DOS SANTOS: Have you put these points to Facebook as a company? What's their response?
KRASNOVA: Well, I'm not sure, but I think that as a provider, of course, it's very important to know what users feel and maybe just somehow try to manage these emotions some.
But also I think we should look at users themselves, so (inaudible) others feel happy when they see the posts. But our study shows that in fact, not everybody feels happy for others. In fact, the many would feel alone or may feel miserable when they see (inaudible) the others are.
DOS SANTOS: OK, Hanna Krasnova there from the Humboldt University in Berlin, thanks so much for that (inaudible) interesting survey which is (inaudible) Facebook could be making us a little bit envious and miserable.
Let's change tack now because the British government has declared war on javanan waffle (ph) in its documents. It now encourages plain English words, such as for instance collaboration and facilitated and instead it has decided to ban Americanisms and also metaphors.
At CNN, we've made up an example of some particularly interesting waffle, to give you an idea of how exactly the language in official documents is likely to change.
Quote, "We've highlighted some of the words which should be avoided," according to news style guide. And here it starts. As you can see there, quote, "We will empower the disadvantaged, facilitating their real life needs. This initiative will tackle problems by fostering a two-way dialogue, nurturing a collaborative approach with a overarching pledge to transform people's lives."
Gosh, if I had to read a script like that, I'd have a serious (inaudible). Here's the official version in plain English that we could see in documentation released by the British government from here on, quote, "We want to help disadvantaged people take better control of their lives. To help do this, we'll talk more and work together to make life better."
Well, that's still pretty meaningless, isn't it, without blowing our own trumpets here, QUEST MEANS BUSINESS has actually won an award for plain English use.
Perhaps it's not -- perhaps it is contagious, let's hope. I've got to say, I have to dig through some of those government documents every now and then, and it does take an awful long time to read them (inaudible) superfluous words.
Now a lady who's not prone to superfluous language is Jenny Harrison. She's standing by at the CNN Weather Center.
JENNY HARRISON, CNN METEOROLOGIST: Hey, Nina, you're right. Get straight to the point. I like all of that. Yes, let's talk about it as it is. Let's talk about the weather and moving into the weekend, everyone wants to know what is going on, certainly if you're heading out and about in Europe. Low pressure still I'm afraid anchored out there in the Atlantic.
It means that we're going to see more of these showers, more of these scattered thunderstorms that of course have brought the temperature down across western areas. But the temperature is actually set to build across central regions of Europe.
The last few hours quite a few more of those scattered thunderstorms particularly strong through the Low Countries but there's more on offroads to go to the rest of Friday, through Saturday into Saturday evening. So this is the whole region under some sort of thunderstorm watch, the red area particularly is low, could see some pretty ferocious storms.
Severe winds, large, damaging hail and of course always the threat of those tornadoes. So just be prepared for all of that. So this is the setup as we go through the weekend. We've got low pressure still across eastern areas. That's obviously more persistent rain, those lower temperatures and then two systems across the north and the west.
So bring in the rain showers but also scattered thunderstorms and then the heat, meanwhile, is really building across the central areas. Now Friday, well, it was still some pretty good high temperatures, Berlin and Vienna, both of you seeing 30 degrees Celsius. So still pretty good temperatures well above the average.
Prague and London also above the average, but a little bit cooler in London at 25. And as I say, it's a very unsettled picture really for the next few days. But look at some of these cities. So certainly Berlin, it will be cooling down. But Vienna, this is one of those places the temperature's set to rise over the next few days.
But just be prepared for the fact that, as I say, it's very unsettled, thunderstorms in the west and then temperatures elsewhere not too bad, nice, dry and sunny across the Med, Nina.
DOS SANTOS: OK. Jenny Harrison, joining us there from the CNN Weather Center.
That's it for QUEST MEANS BUSINESS. MARKETPLACE AFRICA continues on CNN.
ROBYN CURNOW, CNN HOST: A population of some African cities is set to grow by 85 percent over the next 15 years, according to the U.N. And with this massive urbanization comes a property boom.
You're watching MARKETPLACE AFRICA. I'm Robyn Curnow. Let's now go to Mozambique, where the real estate sector is betting on the luxury market.
GONCALD MARQUES, REAL ESTATE AGENT: Good morning. Come in.
CURNOW (voice-over): This is luxury living in Maputo.
MARQUES: So I'm trying here today this apartment. It's located in beachfront of Maputo. This is a brand new apartment, luxury apartment, as you can see spacious, great amount of light. You can see the beach just in front. You can walk there, not even 1-minute walk.
CURNOW (voice-over): Two hundred sixty square meters, five bedrooms, boasting a private swimming pool and ocean views. And it can be yours for $1.1 million or $9,500 a month in rent. Prices like this have become the norm across Maputo.
Rents have increased dramatically over the past few years and that's encouraged developers to pile into the market with more and more properties targeted at high-end buyers.
MARQUES: Pretty much have space to do anything you want, great view on the side for the mangroves; great view with these big windows to the beach. If you have never seen this made before in Mozambique. This is very well done, very well designed and very well thought (ph) for.
UNIDENTIFIED MALE: (Inaudible).
CURNOW (voice-over): A Portuguese architectural firm designed the apartment complex, catering to an elite clientele.
MARQUES: Usually experts are foreign companies are coming into Mozambique and usually the directors of those companies are the ones taking this kind of apartment. You also see some wealth Mozambicans that buy these apartments to live in. But the majority of people buying these type of apartments are to invest.
And of course, people who come with the high standards international high standards, they are willing to pay more to get what they're used to in other countries in the world, especially people coming from the U.S. or coming from Europe into Mozambique.
They come with a very high standard and most of them are kind of sad when they see a lot of properties in Mozambique because you really have to lower your standards to be able to understand the real estate market of Mozambique.
CURNOW (voice-over): The market is becoming more competitive with construction up and down the coastline. A new ring road, partly financed by the Chinese government, has turned this neighborhood into a prime location.
Maputo's changing skyline is helping to fuel the country, which is one of the world's fastest growing economies.
BASILIO MUHATE, ECONOMIST (through translator): Because we were in this situation of reconstruction after the civil war, the infrastructure sector is one of the industries that has grown more than others and has more local and international investment.
Obviously where you have a lot of money flowing is in the capital cities and that's where the bigger investments are done in the housing sector.
CURNOW (voice-over): But most Mozambicans are struggling to get a foot on the property ladder as the rent continues to rise in middle and lower income neighborhoods.
It took Denise Monteiro four years to find a house in her price range.
DENISE MONTEIRO, APARTMENT OWNER (through translator): There are houses, but the problem is the prices are high.
CURNOW (voice-over): She finally found an apartment through an affordable housing project. The prices in this complex range from $25,000 to $65,000 U.S. well within Monteiro's budget compared to other prices in the city.
MONTEIRO: (through translator): Prices are overvalued. People have lost the notion of what's the reality in Mozambique, first the young Mozambicans don't have the means to rent or buy a house according to the prices that are on the market. So that's why this affordable housing project to bring down the housing deficit for the young people.
CURNOW (voice-over): With a growing middle class, there's increased demand for more affordable housing. But as economic opportunities grow, so, too, will the country's upper classes.
MARQUES: This is, in fact, part of a lifestyle. This is the property where you can enjoy what Mozambique has to offer and the beach, the wonderful climate, the people, the culture. So in fact, you are selling either a very good property for the market we are -- we are earning, but also a lifestyle that comes with it.
CURNOW (voice-over): A lifestyle that comes with plenty and a high price tag to match.
CURNOW: From the shores of Maputo to Liberia. After the break we speak to a woman who believes the West African nation can clean up its act if it cleans up its water.
CURNOW: Welcome back. Now she's part of the reverse brain drain. She believes that Africa's diaspora is crucial to Africa's growth. She also recently returned to Liberia, helping to bring clean water to her country men. For this week's "Face Time" interview, let's chat with Saran Kaba Jones of Face Africa.
SARAN KABA JONES, FOUNDER, FACE AFRICA: I lived (inaudible) privilege life, you know, went to some of the best schools. I traveled around and for me, I always had it at the back of my mind that I wanted to go back and do something to give back to those who were less fortunate than I was.
So it was something personal for me and of course, when I went back, what I saw completely touched me and I decided to do something about it.
CURNOW: And your solution to provide clean water to small communities is simple, isn't it?
JONES: It's simple, absolutely. And water, water affects everything. Water is life. I mean, when you visit a country, a post-conflict environment like Liberia, you're overwhelmed by the enormous challenges. I mean everywhere you look, there's a need.
CURNOW: There's a problem.
JONES: There's a problem.
CURNOW: A need.
JONES: So how do you prioritize the priorities, so to speak? I mean, education, health care, gender issues, everywhere you look, there's a need.
So why water? I get that question. Because water affects everything. It affects education. It affects health. It affects girls' ability to go to school, women's ability to farm and get involved in productive economic activities because they have to walk such long distances every day to fetch water.
So if you don't tackle the water problem, you really can't impact any other area of development. So it just makes sense to start from the basic of providing access to water.
CURNOW: And how did you do that?
JONES: I did that simply by raising awareness about the issue, first of all, through word of mouth, through social media, through organizing small events and showing images of what I saw in Liberia and slowly but surely started fundraising to implement projects on the ground in Liberia.
In 2010, I left my job I corporate America to focus on running Face Africa full time, which I've been doing for the past two years. And I go around just raising money, anywhere I can, from individuals, from corporations, from foundations, to go back home and implement water projects.
CURNOW: And we've chatted before but -- you said it's such a simple solution. And you've calculated the numbers that can be multiplied over and over again.
But government sometimes seems stuck in taking what you've done and helping to multiply what is potentially a very simple cost-effective solution.
JONES: Yes. Liberia's a different case because you know, it's a post-conflict country. The government just has so many problems that it's dealing with, infrastructural problems, I mean, the country has no electricity for example. So if we want to focus on job creation and developing a manufacturing industry, we have to make sure that the power is up.
We have to make sure that the road networks are fixed. So they're working on sort of the big infrastructure problems. And they need the basic social services to international community which, in my opinion, has been doing just a terrible job of getting the work done. So I feel almost like we have to take the responsibility.
And when I say we, I mean the young generation, the young people, indigenous Liberians have to take responsibility to fix their problems and contribute to rebuilding the country.
CURNOW: One of the key things about your story is you went away and you came back.
The role of the diaspora, Africans who are living all over the world, and their role and their responsibility, perhaps, towards the countries or the continent of their birth, give me some sense of how important people like you are in terms of Africa's future.
JONES: It's critical. When you're starting to see the sort of reverse brain drain that's taking place on the continent, and it's something that I applaud, I see a lot of my peers and colleagues who are going back to start businesses and start organizations that are helping to rebuild and develop their communities and their countries, and I think it's critical.
But of course, we have to work hand in hand with those who are still - - who are already on the ground with the government, with civil society and make sure that we pool all of our resources together to bring about change.
But I think we have an absolutely critical role to play because we went away and we have some, you know, necessary skills and expertise and knowledge that we can bring back to be able to work effectively, to bring about change in Liberia.
CURNOW: Well, if you go to CNN.com/MarketplaceAfrica, you'll see our interview with Saran Kaba Jones, as well as many of our other "Face Time" interviewees. Please do join us again next week on MARKETPLACE AFRICA. Goodbye.