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QUEST MEANS BUSINESS
Rupee on the Ropes; Currencies Rout; US Markets; European Markets; Third Greek Bailout; "Reprogramming" Gives Breathing Room for US Aid to Egypt; Bo Xilai Trial; Dollar Weaker; Facing Fear Part Two
Aired August 20, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: The rupee, the ruble, and the real, the currency crisis is sweeping across the emerging markets.
Call it "reprogramming," the US solution to the Egyptian aid problem.
And there's a million tickets for sale. Brazil's World Cup opens for business.
I'm Richard Quest at the CNN Center, where I mean business.
Good afternoon. The Reserve Bank of India has made another attempt to prop up the rupee. The currency hit a fresh record low against the US dollar today, slumping another 1.5 percent.
QUEST: Yes, I found it. The currency has now lost and recovered some of those losses, though, after the central bank was seen selling dollars. The rupee is currently Asia's worst-performing currency, falling almost 13 percent against the dollar this year. Just look at the way that graph shows it. It has been a pretty steady, with maybe one exception somewhere in the middle.
India's benchmark, Sensex, lost ground as well for equities and closed down a third of a percent today. JPMorgan downgraded Indian shares and said they will continue to underperform as long as the rupee slide continues.
And just about everything I've read from analysts, from economists, and from emerging market experts suggest that is going to continue. So, it's not surprising, perhaps, that India's opposition has accused the Indian government of mismanagement.
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D. RAJA, COMMUNIST PARTY OF INDIA: The government, even though it acknowledges the seriousness in verse, but in action, the government remains complacent. It has not been taking earnest, serious measures to contain this decline of value of the Indian rupee. And government argues differently.
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QUEST: Now, we are in the middle of the dark days of the summer in the northern hemisphere, at least. So, a currency crisis isn't unusual. In fact, it's de rigueur, but it's usually the euro or sterling which gets hit hard.
This time, the rupee isn't the only one affected. From Brazil's real to Indonesia's rupiah, concerns over the Fed is sending emerging market currencies lower. Join me over at the super screen and you will see exactly what I'm talking about.
We take in all of this our base currency, and our base currency here is, of course, the United States, the US dollar as the central reserve currency of the world.
Starting with those countries that are showing the biggest -- emerging markets that are showing the biggest losses against the dollar, and of course you see straight away you've got Brazil, you've got India, and you've got this large swathe of Southeast Asia, which has been seriously affected -- Indonesia, the Philippines -- right the way across the region, all showing losses.
But it's not a complete one-way bet, because even though they are showing losses, there are gains to be had, and it's the euro and sterling which have been showing gains against the dollar, and China as well. As to put the whole picture together so you get the idea, the moderate losses, they are being seen up in Canada, the other NAFTA countries, and in Russia.
Put it all together as a big picture, and you see that those economies where there are current account difficulties or budget deficits, those are the countries which are now starting to really feel the effects, those emerging markets which had gained so much when the US, of course, had this low interest rate policy.
The rupiah has lost nearly 10 percent, it's currently at an all-time law, and Australia as well is also one of those markets.
As to the markets that are open and trading and doing business at the moment, Zain Asher is watching what's happening on the stock exchange now and joins me -- oh -- I do beg your pardon. I do beg your pardon. That's Alan Valdes. Forgive me.
Mr. Valdes, we talk about these emerging markets and what is happening with the emerging markets. Why and how can these countries turn themselves around, and if -- is it even possible to do that?
ALAN VALDES, DIRECTOR OF FLOOR TRADING, DME SECURITIES: Well, it's going to be difficult. It's not impossible, but it will be difficult because -- just the talk right now of tapering, as you said, sends the currencies really for a dip. And they're just talking about it. They haven't even acted on it yet.
But unfortunately for emerging markets, they have such huge account deficits. That's the big problem. But also, the fact that oil and a lot of their imports all trade on dollars. Oil alone, that's going to affect them drastically, especially India. That's a big drain on their economy.
So, it's going to be difficult to turn around. Can they? Yes, they can, but it's this uncertainty. That's what traders are watching in the currency markets. It's -- we hate uncertainty on Wall Street, and that's what we have right now. Are the Feds going to taper in September? Is it going to be 2014?
QUEST: All right, but -- hang on.
VALDES: We have no picture.
QUEST: If that's the case, and looking at these numbers and looking at the way, do you believe in this environment the dollar remains a one-way bet at the moment?
VALDES: No, not at all. As a matter of fact, if you look at the EU six months ago, when they were demanding payment from -- collateral from Greece for one of their bailouts, Greece said we're going to give you our collateral in US dollars -- in paper from America. They said no, we want your gold. So, things are starting to change on that. The dollar isn't a sure bet, I can tell you that.
QUEST: Except for those emerging markets. If you take India, facing now a full-blown currency crisis and a balance of payments crisis, too, potentially, and Brazil and these other countries, the tide has turned against these emerging markets, and the reason is Washington and Brussels.
VALDES: Without a doubt. Mainly Washington, I have to agree with you there. If we do taper, that's the dark side to tapering. We only think about it here in America affecting the stock market.
But the fact is, the Feds do have to look at the emerging markets, because we are so intertwined with them, especially with the low interest rates the past few years have really boosted their economy. And now, if we start raising interest rates, they're leaving.
QUEST: All right. Alan, we thank you very much, indeed. Good to talk to you about that.
VALDES: Thank you.
QUEST: Of course, it is worth mentioning that the Fed has made it clear in its minutes that the actual -- if you look at the balance of views across the FOMC, the raising of interest rates, that itself a base rate as such or discount rate will not happen for some time to come.
To the markets now and Zain Asher is at the New York Stock Exchange with the day's events on Wall Street.
ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Hey, Richard. Right now, we're seeing just modest gains, the Dow's up just slightly, roughly around 45 points. There's no major economic news to trade on. We're coming off four straight days of losses.
However, I do have some good news for you, Richard. We did actually get earnings from two major retail companies that actually came in better than expected: Best Buy and also Home Depot. That is pushing stocks higher.
And this is interesting, because last week, we got disappointing earnings from Wal-Mart and Nordstrom, and people were sort of saying that it does appear that consumer spending is weak. And today, the news is kind of just the opposite.
But in terms of the week ahead, I do want to mention that it is all eyes on tomorrow, it's all about this uncertainty surrounding the Fed's bond-buying program. We know that the end is near, but the question is, of course, is the economy ready to stand on its own two feet?
We're not entirely sure that's the case. Look at the July jobs numbers. They weren't stellar. Second quarter GDP came in better than expected, but it was still lackluster. And I do want to mention that I think investors will be going through the minutes from the Fed with a fine- tooth comb. But I'm not necessarily sure how much they're going to be finding out. Richard?
QUEST: Zain at the stock exchange, we thank you. European stocks were into the red. Emerging market stress and the Federal Reserve's QE all weighing on the markets, and this is the second day -- yesterday, you and I were talking together, we saw four red arrows, and we have the same today.
The mining sector bore the brunt in London. BHP Billiton, Glencore- Xstrata shares down more than 1.5 percent after huge first-half losses. We'll talk more about that later in the program.
Greek bond yields rocketing higher. Now, we know that Germany's finance minister Schaeuble has already acknowledged for the first time that Greece may need a third bailout. At the same time, of course, the German chancellor has said that they will not be particularly looking favorably on a further bailout for Greece, or at least a restructuring of the current bonds.
The Schaeuble comments come just five weeks before Germany's general election, and the Troika's rescue packages for Greece have not been popular. Ten-year bonds are up near 3 percent so far today.
President Obama finds a way to hold up aid for Egypt. It gives the administration breathing space. When we come back.
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QUEST: A US official has told CNN some of its military aid for Egypt is now on hold, which will allow it breathing space. Washington's stop-gap solution has got one word for it: it's known as "reprogramming." It means the US can restore the aid later or cut it altogether. And while no firm decision has been made either way, the EU foreign ministers decide their response in Brussels tomorrow.
Israel is deeply interested in US aid going to Egypt and, indeed, has been one of the countries that has been exhorting the US not to take too much drastic action. CNN's Jim Clancy is in Jerusalem.
JIM CLANCY, CNN INTERNATIONAL CORRESPONDENT: Most here in Israel see the US military aid as a reward to Egypt's military for holding onto the peace accord with Israel. But they also see it as the only force they perceive as capable of instilling a sense of real security.
Egypt's military acted almost immediately upon ousting Mohamed Morsy to do something the Israelis have wanted to see, not just for years, but for decades: the destruction of the system of tunnels leading from the Sinai into Gaza.
Hamas is seen as an offshoot of the Muslim Brotherhood. Egypt had its own reasons for taking action there, among them may have actually been to support Israel as a means of insuring that US aid for its military will continue.
Again, the Israeli perspective, it might not be perfect, but Egypt's military can prevent a worst-case scenario, the spiraling of the country down into violence, chaos, even civil war.
But pause and take the US perspective. It had counseled the military government in Cairo, seek an inclusive policy that wouldn't drive the Muslim Brotherhood away or underground. The military, given its actions in the last week, rejected that counsel.
Yes, a military can serve to maintain security, but it's not as easy as that. A military can also serve to escalate a crisis into a disaster by overreacting and creating the basis for a power struggle within its own citizenry.
Case in point: Syria. Rewind two years. Syria's army was ordered to attack peaceful demonstrators demanding multi-party representation, and end to corruption, and greater economic opportunity for everyone.
It can be fairly argued that it was Bashar al-Assad's heavy-handed military response that ignited what is not now just a civil war, but a proxy war involving the US, Europe, Turkey, and Gulf Arab states on one side, against Iran, Lebanon's Hezbollah, as well as, to some extent, Russia.
Yes, the military can bring stability, but in the case of Egypt, as in anywhere else, that depends on what strategy it pursues. Clearly, the US doesn't think Cairo is pursuing the right strategy, and it's still using its influence to try to steer Egypt's military in a different, more inclusive direction.
Washington and the Obama administration may have a checkered record in the Middle East right now, but that doesn't mean they're always wrong. No one can predict what lies ahead for Egypt. In the Middle East, never assume things can't get worse. They can. The message Washington may be sending is pause, reflect, think where you're going, where you're taking the largest nation in the Arab world.
Jim Clancy, CNN, Jerusalem.
QUEST: Now, it was arguably the biggest scandal to shake the Communist Party in China in decades. Within two years, Bo Xilai went from a power broker to a man who may face the death penalty.
His trial starts on Thursday, and his son has told "The New York Times" he's helping his father get the opportunity to answer some of his critics and defend himself. Our correspondent in Beijing, David McKenzie, now charts Bo Xilai's downfall.
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT (voice-over): Chongqing, a mega-city of some 30 million in the southwest, and center of China's biggest political scandal in a generation.
Bo Xilai ran this city. The son of a famous revolutionary leader, a princeling tapped to join the untouchable ranks of the party. The Chinese politician that broke the mold.
FRANK CHIN, POLITICAL COMMENTATOR AND COLUMNIST: Bo Xilai was unique. He was not a dull party hack, the way I think 99 percent of party officials are.
MCKENZIE: Bo organized massive Sing Red rallies, packing stadiums with Communist Party faithful in TV-friendly spectacles, a throwback to the days of Mao that startled both friends and enemies.
LI ZHUANG, DEFENSE LAWYER (through translator): He was good at using media to glamorize himself. He successfully fooled ordinary people. They weren't able to see his real intentions and political ambition.
MCKENZIE: Bo signaled his ambition by bringing in powerful police chief Wang Lijun. Together, they arrested thousands of alleged criminals in a smash black campaign.
MCKENZIE (on camera): Bo Xilai and his police boss had almost unlimited ambition. If you look at this, it was supposed to be the cloud computing center of the Chongqing police force, this enormous cathedral- like.
MCKENZIE (voice-over): His lofty aims and brutal tactics made him enemies.
LI (through translator): During his four years ruling Chongqing, he marked his cruelty in history with a number of people he arrested, executed, put in reallocation camps, and thrown into jail.
MCKENZIE: For Communist Party royalty, Bo's downfall began in an unlikely place: the shabby Lucky Holiday hotel, where Bo's wife, Gu Kailai's, business dealings with a British family friend went horribly wrong.
MCKENZIE (on camera): Court documents showed Gu Kailai lured Neil Heywood to this hotel for a late-night meeting. She plied him with expensive whiskey, then when he got ill, she laid him on a bed like this and poured rat poison down his throat.
MCKENZIE (voice-over): Local authorities tried to cover up Heywood's death, surrounding the hotel and cremating his body. It may have all ended there had Bo's police chief not fled, asking for asylum, then surrendering to the Chinese government and revealing the coverup.
CHIN: Corruption is so widespread that if they wanted to target somebody, they can almost always find something to use against a person. And I think that Bo had a lot of enemies in Beijing, and when this came up, it was a godsend.
MCKENZIE: Bo Xilai was stripped of his party membership, his wife, Gu, convicted of murder. From the very heights of power, Bo Xilai could now face the death penalty.
David McKenzie, CNN, Chongqing.
QUEST: Tonight's Currency Conundrum: which country has become the first to officially recognize the bitcoin? Is it A, India? B, Germany? Or C, Panama? The answer later in the program.
We've talked much about currencies tonight. Tonight, notwithstanding the emerging markets issues, the dollar is weaker against the pound, the euro, and the yen. Those are the rates --
QUEST: -- this is the break.
QUEST: Now, last night on this program, we talked about a fear of speaking in public. The next step, of course, in any fear and facing that fear is doing something about it. So, in the second part of Facing My Fear, having already revealed that I don't particularly like and sometimes find terrifying speaking to a live audience, now you have the impossible, or at least attempt the possible: how to relax.
QUEST (voice-over): Previously on Facing My Fear --
QUEST (on camera): I hate public speaking.
I think it will -- feed my insecurity.
CLAIRE DALE, COMMUNICATIONS SKILLS COACH: Your next stretch ones. I need you to practice these exercises every day.
QUEST (voice-over): At home or on the road, I've been practicing, and now, I'm ready for more.
DALE: You should always check where the breath is going down and that you're grounded.
QUEST: Today, we move from the principle of Think to Breathe.
QUEST: This is about preparing the voice to perform.
DALE: If you hold those stones --
QUEST: I admit because I speak for a living, it's not something I've given much thought to in the past. Actually, to be honest, almost no thought.
DALE: And go with those legs relaxed. All right. And now, you do that freely so the head and -- yes, yes, yes! Woo! Feel that sunshine in the August.
QUEST (on camera): August.
DALE: Good. I didn't get October there.
DALE: Good, OK.
QUEST: I can't distinguish whether I'm actually pushing the air out or whether it's just naturally doing it.
DALE: It's naturally doing it. You don't have to worry about that.
QUEST (voice-over): From individual. Words. I graduate to a whole text.
QUEST (on camera): After a good concert -- after a good concert. Now this is -- now, just, this is going to be difficult for me. Of course I can do it, but for God's sake, if I can't do that, then I shouldn't be --
DALE: Yes, yes, yes --
QUEST: -- doing what I'm doing.
DALE: We're going to experiment with this a little bit.
QUEST: That's what I'm saying. So, I'm trying to work out what it is you want me to do to it.
QUEST (voice-over): And without warning, that unnerving sense that this coaching is pulling the rug out from under me. It's challenging my tried and tested methods. Far from taking me out of my comfort zone, I now feel I'm on the edge of the precipice and about to fall.
DALE: I saw you do two things. You went into broadcasting mode.
DALE: And then you went back and you did that first phrase, "After a good concert," and you just told it more storied --
QUEST: Right, because what -- right, because what I'm doing is I'm saying, well, what's the important word there? Is it "after a GOOD concert," or is it "after a good CONCERT"?
QUEST: Or is it both?
QUEST (voice-over): It takes practice, and as I go, the text starts to ring true.
QUEST (on camera): This is the hour, I feel, to give and receive confidences.
DALE: So, go back --
QUEST: This is the hour, I feel, to give and receive confidences, confessions of the soul.
QUEST (voice-over): A humbling experience. The business leaders and chief execs who take this course must learn to perform without the comfort of a corner office or a board room. And I must survive without the familiar bright lights of a studio.
DALE: In none of this am I expecting that suddenly we're going to land on something that becomes a new style for you, not at all.
QUEST (on camera): Right.
DALE: We're exploring range, we're exploring where your voice wants to go.
QUEST: There's a lot to think about on that, from what you've said.
QUEST (voice-over): Next time on Facing My Fear --
QUEST (on camera): Join me in the library.
QUEST (voice-over): My biggest fear of all, bringing my job into the classroom.
DALE: That's quite a find, isn't it?
QUEST: Now, many of you have commented, how can one be so used to being in this environment on a daily basis and still have a fear of public speaking? But there is a difference, as we talked about last night. Because when talking to you down that way, well, it's all a little bit different. Now -- because I can't see you.
Right. Now, Arash Shirazi says, "Dive into your fear."
QUEST: "It's embracing fear that helps you grow. And a shot of tequila helps." Oh, perhaps so. Also, we've got some other ones that suggest, try -- "Accept it," says Raffaele Ranieri. "Accept it, don't struggle against it and you will succeed."
Wolfram Klug says "Accept yourself as you are, with your fears as well." And how about Wuver Alfred. "Face fear by prayer," committing the issue into a higher power's hands, "for he knows the end from the beginning." That's one way of looking at it when you talk about fear. Just get on with it, I suppose.
Once again, if you have any thoughts about the process of fear and how you've faced it, in jumping off heights, whatever it might be, we all love to share them. Tweet me @RichardQuest and we'll get to some more of your fears and how you face them before the end of the program.
As we continue QUEST MEANS BUSINESS on this edition, this Tuesday edition, US retailer JC Penney reports another bleak quarter. There's a glimmer of hope, and it's pleasing investors. We'll tell you what it is after the break.
QUEST: Hello, I'm Richard Quest, there is more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.
Egypt's military-led government is continuing its crackdown on the Muslim Brotherhood with the arrest of the movement's spiritual leader. Reports say the Supreme Guide, Mohammed Badie, is accused of inciting violence. President Barack Obama is set to discuss the situation with top security officials at a scheduled meeting.
Officials in the U.S. state of Georgia have arrested a suspect accused of firing at least one shot at an elementary school in the Atlanta area. An official says all of the children are safe and they're being moved to a nearby shopping center where parents can pick them up.
"The Guardian" newspaper in Britain says it recently destroyed all files related to the U.S. national security leaker Edward Snowden. The newspaper editor said the government insisted all materials be handed over or obliterated.
Meanwhile the domestic partner of "The Guardian" reporter who initially broke the Snowden story is threatening legal action over his 9- hour detention at London's Heathrow Airport.
A Pakistani court has charged the former president, Pervez Musharraf, with the murder of the opposition leader Benazir Bhutto in 2007. Ms. Bhutto was killed as she campaigned for general elections. Musharraf's spokesman said the charges are part of a smear campaign against the ex-army chief.
Czech lawmakers have voted to dissolve parliament, paving the way for early elections, following months of political turmoil after the center right government of Petr Necas collapsed in June amid a bribery scandal. The elections are expected to be held in October.
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QUEST: Major companies on both sides of the Atlantic have reported mixed results in the second quarter. You may ,of course, recall it was the worry over poor results that send the New York market down very sharply late last week.
Several hundred points off the Dow because Walmart and others were not looking terribly encouraging.
Felicia Taylor is in New York where JCPenney has announced another major loss and Jim Boulden is in London to see why the world's two top mining companies have taken a hit.
We'll be with Felicia in just one moment.
Jim Boulden, the mining companies and their misery and sorrow, why?
JIM BOULDEN, CNN CORRESPONDENT: Well, mining's one of those industries that goes through these cycles and this has been a supercycle. It's been a boom for commodity prices of last 10 years, metal prices, if you think about it, because of China and India.
So many of these huge miners which have -- are listed here in London, but their assets are basically Australia, South Africa, places like that where they have massive mining and there's been a lot of consolidation and there's been a lot of costs coming out of it.
But at the same time, we've seen commodity prices falling, Richard. So this year, for instance, Glencore Estrada (ph) with their results out, they took an $8.4 billion hit with the costs for this merger. And you can see the share prices. If these two had been together all year, this is what you'd see. This is a massive multibillion merger since May of this year. And Glencore shares have taken a real big hit.
And if we look at BHP Billiton (ph), same thing, of course different; there's not a merger this year, but its share price is hit as well, very, very erratic. But the bottom line is Richard that we've seen these huge mining companies, they had a great 10 years, a lot of investment. But they were paying top dollar for some of their investments and some of that now is coming home to roost, Richard.
QUEST: OK. Jim, stay where you are; let's talk to -- let's bring Felicia in because JCPenney, well, should we be surprised by anything that comes from that particular company, bearing in mind the shenanigans over its chief execs and its losses?
FELICIA TAYLOR, CNN CORRESPONDENT: You mean the musical chairs that's been happening recently?
Yes, you can't really be too surprised. So same-store sales were down; sales overall; net sales were down about 12 percent. But the point is this company is going through a turnaround. There are a lot of people out there that are betting on JCPenney, admittedly we've seen the fiasco that happened with Ron Johnson of Apple fame. He has now left. And since April we've had Mike Ullman (ph), the new CEO, take place. So these are really the first numbers that we've actually seen from him under his stewardship. He admits there's a long road for JCPenney to go to get back those customers that literally fleed (sic) to the door -- or fled, I should say, to the door (inaudible) Ron Johnson said was no sales policy. That's a crazy thing in the United States, a sale is a sale is a sale. And we all like those.
So Mike Ullman (ph) has said we are facing headwinds of declining mall traffic, he admits that. We know where the problems are, how to address them and have the plans in place. That is very significant --
TAYLOR: (Inaudible) traffic is encouraging. The stock, one thing, though, Richard, seriously, the stock is down some 30-35 percent this year alone. Today it's up almost 6 percent.
QUEST: Ladies and gentlemen, on both sides of the equation, we have Felicia and we have Jim.
Jim, how far is all of this basically the companies involved their individual problems versus something systemic that tells us something about the market as we move into the second half of the year and we look to the (inaudible)?
BOULDEN: Well, Rio Tinto (ph), another large miner, also had a huge loss as well. Now I should say that BHP Billiton had a profit for the year, but down a third from where it was before. It is the end of a cycle so this is very much, even if individual companies have issues, it's very much looking at the commodity sector as a whole.
And that's the thing that we looked at through the '90s when we saw the boom time with the commodity sector and many people plowing the money into these companies as they were listing on the London stock exchange. So we are the end of this -- one analyst called it the supercycle.
And now you're going to see companies taking costs out; you're going to see them cutting back on some of their investments; and because they're fearing a China slowdown, so definitely this is one of those bellwethers that economists look at very carefully.
QUEST: Finally, Felicia, the possibilities of a resurgence at Penney's, JCPenney's middle America, it's still middle America's store.
TAYLOR: Absolutely. There's no question about that. And you've got to remember, there's some heavy hitters that are betting on this turnaround story that Ullman is trying to sell and doing a pretty good job of it. You've got Bill Ackman (ph), who is the largest shareholder, admittedly he has stepped down from the board of directors, but he's still in the game.
You've also got George Soros, a billionaire investor, who's betting on this turnaround. And don't forget, JCPenney has a lot of very valuable real estate. And finally, there's a hedge fund investor, a man named Kyle Bass (ph), who's picking up their debt. That also is very significant. You've got three major players that think JCPenney is going to come through this.
QUEST: Felicia Taylor and Jim Boulden, we thank you for that.
The wait is over for football fans everywhere. Tickets went on sale today for Brazil's World Cup extravaganza. When we come back, in Sao Paulo see how this crucial event and how important it is for Brazil's economy.
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QUEST (voice-over): Tonight's "Currency Conundrum," I asked you which country has become the first to officially recognize the Bitcoin and the answer is B, Germany. The country's finance minister has formally classified the digital currency as private money, which means the German government can now tax Bitcoin users.
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QUEST: A million tickets for Brazil's World Cup went on sale today. The cheap seats -- hah! Ninety dollars; the most expensive seats are nearly $1,000 each, as Brazil hopes for a cash bonanza from visitors. The emerging market has suffered from a currency crisis. The real has lost nearly 5 percent this week alone.
Shasta Darlington is with me now from Sao Paulo.
Shasta, OK, so the currency we know is under pressure at the moment. The real, along with -- not as bad as India and we know the economy's been suffering and we know the government is in a certain amount of trouble.
Factor into that, please, now we've got the sale of these tickets.
SHASTA DARLINGTON, CNN CORRESPONDENT: Absolutely, Richard. I think we should be very clear, though, who gets that money. These prices are set by FIFA. The percentage that Brazil gets is not clear. So I think how much money the country's going to make off of this, they say about $25 billion in total.
But then again, outside experts say they're going to spend $30 billion to put on the World Cup. So will they see any profits at all? I thin that's a big question mark. In fact, there was a lot of excitement when Brazil when it first came out that Brazil was going to host the World Cup, then the Olympics. But right now, inside Brazil, people are not feeling that optimistic about it. They thing too much spend -- there's been too much lavish spending on these events on 12 stadiums, more than $3 billion alone has been spent on the stadiums and not on the infrastructure that the government and FIFA promised would come with this.
So I wouldn't see this as a big bonanza for Brazil by any stretch of the imagination, Richard.
QUEST: The talk is that FIFA is now getting marginally concerned that things will not be ready or at least if they are ready, they may not go smoothly, although the infrastructure (inaudible).
Are you getting wind of that there?
Are people talking about that there, that now there may be -- and I don't want to be the naysayer and the doomsayer that always looks for the black cloud on a weekend.
But are people talking about that now?
DARLINGTON: Absolutely, Richard. They've been talking about it all along. And part of the problem was just this ambitious plan of holding the World Cup all across the country when they had that sort of warm-up event, the Confederations Cup tournament, there was a lot of skepticism, would the six stadiums be ready.
They were. They've got another six stadiums to get ready for the World Cup. And again, will they have them ready by the end of December? They will. They'll have the stadiums ready. They may not be 100 percent perfect; they're going to have those stadiums ready. Some of them have already sort of cut things out of the budget. One stadium that was going to have a roof now won't have a roof. They will have the basics there and they'll pull it off. I think again the infrastructure is still a big question mark. All of these new fancy airports, widened highways, fast lane buses, high-speed train between Sao Paulo and Rio. It's just not coming off the paper. That's where the real problems are coming up.
And even then, we saw during this last tournament, there were a lot of protests. We're going to see that during the 2014 World Cup as well, which means even more spending is going to go into security.
So they'll pull it off. It's just under what circumstances, Richard.
QUEST: Shasta Darlington, who is in Sao Paulo for us tonight -- and no doubt has already registered for the lottery, at least of some tickets. That beats spending a grand or two on the final.
The weather forecast now. Jenny Harrison is at the World Weather Center. Good afternoon.
JENNY HARRISON, CNN METEOROLOGIST: Good afternoon to you, Richard, yes. (Inaudible) Europe. The World Cup, a bit early for World Cup weather, yes. I know that's what you're going to ask me. I'll get onto that (inaudible) nearer to the time.
(Inaudible) conditions in Europe. It's been a pretty good summer across many areas. But there's been a bit of a dramatic drop in temperatures in the last 24 hours. This front, you can see, which is actually where all that cloud is, is moved across, brought the cloud which (inaudible) sunshine but also brought with it some rain. It's a fairly quiet picture apart from that. As it has done that, it's also (inaudible) much, much cooler air, some scattered thunderstorms, nothing particularly strong. We've got some hotter, drier air coming across the southwest. That will also just pump up some warmer air into the west of France, the U.K. as well. Just as we head towards the end of the week, be prepared for a bit of a warm spell for a couple of days. But look (inaudible) these temperatures. Now Monday, look at this, 34 in Budapest, 27 on Tuesday, 32 down to 20 in Vienna ,32 down to 21 in Bratislava. You get the general idea, all because of that front as it came through. So for the next few days, temperatures pretty much near the average for Vienna, Belgrade, Rome. It's been a while since we've seen the temperatures actually at their average.
There is a little bit more rain in the forecast, a little bit cloud as well. Nothing spectacular, travel conditions pretty good, pretty fair and dry for the next few days and temperatures also warm in Madrid with a high of 38, a little bit cooler in Dublin. It was 21, chance of showers there as well.
Now I need to talk about the conditions in the Philippines. Just look at this staggering picture, 70 percent of Manila is actually underwater, 600,000 people have been impacted by these rains. It really began Saturday into Sunday and Monday. The airport has been 160 airport air flights been canceled today. Some are domestic, some international but the roads actually getting to the airport are actually closed. This is the state of travel, certainly the major airports on Wednesday. You could see some very long lengthy delays. obviously into Japan, Tokyo as well, Manila as well, this certainly in the Philippines, you can actually get to the airport, the best advice as always is to check ahead, check with your carrier first of all. And then as you can see, Hong Kong, Singapore, we've had some very heavy rain and thunderstorms in and around Hong Kong. And as we're also watching the progress of this latest tropical storm which is very close to Taiwan, that could also have an impact there. But look at the rain that has come down, look at this, in Manila ,over half a meter. This just in, as you can see, since Sunday. This more rain than we normally have in a month, Stanley Point (ph), getting on for a meter of rain. There's more in the forecast. This is what is actually caused all this, Richard. Just look at this, normally we have the southwest (inaudible). We talk about this, it brings in the rain from the southwest. We get these huge amounts of rain so we expect to see it. But then what happens is if you put into the equation something like this, a tropical cyclone that comes along, this then literally acts as a magnet. It just pulls in even more moisture right across the Philippines. It literally pulls it all towards this system and it just continues to produce more and more rain. And that is why we see systems like this. Unfortunately, for more rain in the forecast. This is what we're watching right now, very close to Taipei. You can see it, Taiwan. This is it, Tropical Storm Chime (ph). This is the one now on its way towards Taiwan, so be prepared for travel conditions in the region to actually begin to deteriorate quite rapidly, Richard, over the next 24 hours as that system gets closer.
QUEST: Thank you, Jenny. Jenny Harrison at the World Weather Center, many thanks.
I've got a confession to make. Until about this afternoon I knew the music, but hadn't put the music to the name.
"One Direction". Well, I'm -- maybe I'm the only person who's never actually put the music to the name. But whatever it is, it's one famous boy band, a 3D movie and there were thousands of hysterical teenage fans. And that was only our correspondent and crew member there.
One Direction film premiere was in London. Our correspondent will be with us after the break. (Inaudible).
QUEST: Well, as the noise makes clear, I guess middle-aged men in suits is not the target audience for the most popular boy band the world at the moment. But certainly they are whipping up a frenzy in central London at the premiere of a documentary on its meteoric rise. One Direction, the members of the band, walked the red carpet for the new movie, "This Is Us." And Zain Verjee caught up the superstars at London's Leicester Square.
ZAIN VERJEE, CNN CORRESPONDENT: One Direction, ladies and gentlemen, guys (inaudible) you are (inaudible).
You are live. How do you feel today? Your movie about to premiere.
LOUIS TOMLINSON, ONE DIRECTION: This is the best, a real amazing day for us and just incredibly how the world meant to be here and see this turnout. It's incredible.
VERJEE: What was it like for you, making the movie?
NIALL HORAN, ONE DIRECTION: It was interesting. Obviously we started on the Xbox and so we were used to having the cameras around us (inaudible) a lot. But yes, it was great. We just wanted to make the best film we could possibly make and really get our personalities across. And I think we've done that. I hope everyone enjoys it.
VERJEE: What was the coolest part about the film for your fans?
VERJEE: Except for Niall, what about it that you think? (Inaudible) very cool and very (inaudible)?
LIAM PAYNE, ONE DIRECTION: For me, I got a very big fish. That was my coolest part.
VERJEE: Oh, yes. What kind of fish?
PAYNE: I'm not entirely sure. But it was quite big.
VERJEE: What is the message you have for your fans about this movie?
TOMLINSON: We really just can't stress enough just how they have done this for us and that's what we're trying to get across in the movie, that they have created us and they've been absolutely amazing and (inaudible).
VERJEE: Guys, just look at that, like everyone, everywhere you go, everyone goes berserk. How do you cope with that? How do you deal with that?
HORAN: Well, it's not bad being our age and having a lot of girls coming at us.
VERJEE: Seventy thousand.
HORAN: Which -- yes, exactly, where you don't have (inaudible). It's (inaudible) fun.
QUEST: Zain Verjee joins me now live from London.
(Inaudible) -- Ms. Verjee, were you able to control yourself or did the emotion get too much?
VERJEE: I couldn't control myself. I was right in there with 70,000 others screaming fans, and I had my share of aah moments. My best moment was when Harry actually while I was interviewing him and doing a piece to camera, leaned forward and gave me a wet kiss on my cheek. It was fabulous.
QUEST: I've seen that picture and when I saw that picture, I just thought, A, Zain Verjee will never wash that part of her anatomy again or, B, she will be struck down by teenage fans who are jealous as can be.
VERJEE: I did get the evil eye from the thousands of people that were out here yelling in Leicester Square. They were yelling at me, going, hey, hey, what about us? The movie was the big focus as well after the boys because a lot of people are excited to see it because it reveals what life is like behind the scenes, the relationships with their families, how difficult it is for their parents to let them go as they go do the world tours. And the kind of relationship the boys have between themselves as well. So it really is a kind of a bird's eye view, a fly on the wall view of what it's like to be around One Direction.
The director, Morgan Spurlock, I talked to him as well; he was really excited. And he also said that it was just amazing -- Richard, you know what it's like whenever you travel anywhere there are thousands of --
QUEST: But here's the point. Here's (inaudible). This is a -- for people like Simon Cowell, this is a new development, isn't it, because having created these -- (inaudible) they didn't win "X Factor," but having created these bands, having got them to the top, to social media, Twitter, tweets and al this sort of stuff, only takes you so far. You then have to let the viewer get that -- or the audience get that little bit closer.
VERJEE: Exactly. And we talked to Simon Cowell just a short while ago himself, while he was here and I asked him a little bit about the marketing after the fact. You've got the bands together; they're really great. people love them. But how do you actually play it in the current market, in the entertainment industry?
Listen to his response.
(BEGIN VIDEO CLIP)
SIMON COWELL, ONE DIRECTION MANAGER: You let the audience come to you. You can say that you had some grand plan; I didn't. No one did. All we said was these guys are talented, make a great record. The fans got behind them and they spread the word. So there was no master plan.
VERJEE: One Direction Perfume, for God's sake.
COWELL: Didn't think about that, either.
(END VIDEO CLIP)
VERJEE: And Richard, you know how I like to gamble every once in a while. And I was looking at what the bookies were saying. And they said that their movie, "This Is Us," could be -- could -- be as big as "Skyfall," the James Bond movie. We'll have to wait and see for that.
QUEST: Right. We'll leave it there. Zain Verjee at Leicester Square in London.
One Direction. And a "Profitable Moment" is after the break.
QUEST: Tonight's "Profitable Moment": any student of financial markets and foreign exchanges knows only too well that in the summer you're pretty certain of a currency crisis somewhere in the world, sterling has suffered from it many times over the years.
And if you look this year at this year, in 2013, we have a currency crisis brewing nicely in -- down in Brazil, over in India and in Southeast Asia. Unfortunately, this currency crisis for this year has a new air of seriousness about it because it comes at the same time as the U.S. is about to taper off its quantitative easing and bond purchases.
Currency crises are serious because they have long-lasting implications for the economies involved, which is why in India's case particularly tonight, we dare not ignore what is happening today.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Atlanta. Whatever you're up to in the hours ahead, I hope it's profitable.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The headlines: it's the top of the hour.
Egypt's military led government is continuing its crackdown on the Muslim Brotherhood with the arrest of the movement's spiritual leader. Reports say the Supreme Guide Mohamed Badie is accused of inciting violence. The U.S. President Barack Obama is set to discuss the situation with top security officials at a scheduled meeting.
Officials in the U.S. state of Georgia have arrested a suspect accused of firing at least one shot at an elementary school in the Atlanta area. An official says all of the children are safe; they're being moved to a nearby shopping center where parents can pick them up.
"The Guardian" newspaper in Britain says it recently destroyed all files relating to the U.S. national security leaker Edward Snowden. The newspaper's editor says the government insisted all materials be handed over or obliterated.
Meanwhile the partner of "The Guardian" reporter who initially broke the Snowden story is threatening legal action over his 9-hour detention at London's Heathrow Airport.
And Czech lawmakers have voted to dissolve parliament, paving the way for early elections, the move follows months of political turmoil after the center right government of collapsed in June amid a bribery scandal. Elections are expected in October.
(END VIDEO CLIP)
QUEST: Those are the news headlines. Now to New York for "AMANPOUR".