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Quest Means Business
Gold Prices Tumble; Commodity Prices Crumble; Falling Gold; Gold's Japanese Stronghold; US Markets Slide; CitiGroup Profits Jump; French Ministers' Assets Exposed; Global Manhunt for Escaped French Prisoner; European Markets Down; Dollar Continues Decline Against Yen, Up Against Euro, Pound; Furor Over Margaret Thatcher's Funeral
Aired April 15, 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: A gold meltdown. The precious metal is now set for its biggest two-day loss in some 30 years.
French ministers open up their bank accounts amid accusations of champagne socialism.
And just how safe is your SmartPhone? We examine the latest threats to your data.
Hello, I'm Nina Dos Santos and this is QUEST MEANS BUSINESS.
We start this evening with gold because this precious commodity is now down more than $100 this very hour as investors continue to turn their backs on bullion. Take a look at the price of gold over just the last couple of trading sessions.
As you can see, this is how it's fared since Friday. And in the space of just two trading sessions alone, as you can see here, the price has actually fallen more than 12 percent. This commodity hasn't actually dropped that far since all the way back in 1983.
There are several reasons for the slide. On the one hand, we've got a record-breaking run on the world's stock markets, but also the prospect of a gold reserve garage sale by Cyprus and its stricken economy, not to mention the Chinese growth numbers that came out today and were weaker than expected. All of those issues makes this commodity quite a bit less attractive as investment prospects.
Other precious metals have also been on the slide as well in today's session. Take a look at this one. Silver is down by more than 10 percent, we've got platinum as well, which is also off about 4 percent.
And it's not just metals. It's also on the oil markets as well, because Brent Crude is also down below the $100 a barrel mark. We haven't seen that one in some time. So, officially off to bear market territory for gold in just the first few months of the year.
Let's go over to Maggie Lake who's about to tell us all at CNN New York. Gold has been on such a run of late, Maggie, amid, of course, a lot of concerns about the amounts of quantitative easing. But really, some people were saying this was ready to come for some time.
MAGGIE LAKE, CNN INTERNATIONAL BUSINESS CORRESPONDENT: Yes, that's what people had been worried about. But I tell you, Nina, this thing looked like a freight train today, and some of those numbers that you put up with the other metals are astonishing. These are big moves, even for market veterans who are used to watching this type of thing. They are surprised by the ferocity of this.
Listen, you mentioned a lot of the fundamentals, and they're out there. And it's not just Cyprus, of course. They're worried will other Europeans also feel the need to liquidate if they've got bills coming.
But I've even heard people saying maybe it's because it's tax day here in the US and people need to liquidate, get some money to pay those big tax bills. If that sounds like reaching, maybe it is. It makes me wonder really if anyone's got a real handle on this.
We talked to one New York trader about what he was seeing in the commodity pits. Here's what he told us.
(BEGIN VIDEO CLIP)
ERIC ZUCCARELLI, INDEPENDENT GOLD TRADER: You've divorced yourself from these two different dynamics which were in place for at least two or three years prior. So, when we have sell-offs in industrial metals, like a copper, which was down at one point 14 cents or a good 2 percent, and silver, which was down 10 percent, it brings down the gold and the energy products, too. So, they all definitely seem to move in tandem.
(END VIDEO CLIP)
LAKE: And this makes a lot of sense to me, Nina, Eric talking about the fact that gold really became an asset class that people were trading, among the other relationships, trading positions they had.
You had hedge funds and pension funds now fearing that the bubble has burst in gold. They don't really care why, they just need to get out because they don't want to stomach the losses, they don't want to turn to their investors and say that.
And another thing that people have brought up is because of the nature of markets these days, you have a lot of computer program trade, algorithms that are running things. Once you start to have a market moving quickly with this kind of momentum, it triggers a lot of trade.
Should people, because China is slowing down and they're selling copper also be selling gold? Maybe not, but these things are grouped together in baskets, and everyone's just panic selling out of them.
So, some people think it's overdone, maybe there's room to sort of differentiate now between metals, between some markets, but it's not going to happen right now. They're still afraid to step in front of that momentum. It's the trading world we live in today, Nina.
DOS SANTOS: That's an excellent point, isn't it? The fact that some of these metals move in tandem whereas really when you take a look at what they're used for, there's no obvious link.
Let's just go back to the gold --
LAKE: Right.
DOS SANTOS: -- hedge against inflation. Now, obviously with the United States and many world economies now printing money like there's no tomorrow, trying to sort of inflate their way out of their debt bubbles, that's traditionally where people have been putting gold. Just remind us exactly about how that hedge works and why people have been investing in it so much.
LAKE: Well, Nina, again, I -- when they're not sure of the value or when people are trying to devalue their currency, they want to return to something that does have a -- that they can -- that will hold its value, right? So, they're going to turn to gold.
But again, I wonder really whether that link we thought was there because of all that liquidity has been as strong or whether this wasn't people -- if you come in and you can buy gold every day and gold is going to go up, you're going to do it.
And when hedge funds are playing with that, hedge funds are short-term players. They're not in it for the long-term. They're not hedging against inflation in the traditional way. So, I wonder if that was really driving it.
And that's maybe why we're seeing this pullback despite the fact that you've got all of that quantitative easing, and now you've got Japan doing it as well. So, you would think that -- again, that correlation, that traditional correlation may be breaking down.
I will say one thing. There was some talk, there's some chatter coming out about the fact that maybe some of those Fed governors here in the US, the Federal Reserve, thinking about an end game for quantitative easing.
It's not going to happen yet, but even some of the more dovish members have been talking to the press and talking openly about the fact that they're feeling a little better about the economy, and maybe now they can envision a time when they could start to pull back on that bond buy.
Traditionally, you could say maybe that is going to feed into what's going on with gold, but again, I think all bets are off. This has the real feel of a momentum trade that now has a life of its own and is divorced from economic fundamentals, Nina.
DOS SANTOS: Bitcoins today, gold tomorrow. Maggie Lake, you're becoming something --
(LAUGHTER)
DOS SANTOS: -- of an expert in all these alternative currencies. Keep the gold watch, my dear. Thanks every so much for that, joining us from New York.
Well, Maggie did mention Japan, and there's still, of course, a lot of demand for gold in Japan, where the weaker yen has made it even more tempting to cash in on your jewelry these days. As Diana Magnay now explains, that means plenty of trade for those who are looking to buy.
(BEGIN VIDEOTAPE)
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (voice-over): Yoshiko Sayama has had this gold jewelry sitting in a drawer for years. It was a gift from her husband on wedding anniversaries. But she says it's out of fashion. She prefers silver.
"I heard the gold price was very high now," she tells me, "so my daughter said let's sell it."
Still, they're surprised at how much it's worth: 180,000 yen or $1800. The yen has sunk against the dollar since the advent of Abenomics, Prime Minister Shinzo Abe's attempt to battle deflation and years of stagnant growth. And a weaker yen means gold in Japan is worth more.
"Gold is bought and sold in dollars," the manager says, "so the weaker yen means that gold price is better for Japanese customers, who use the yen currency." He shows me the day's takings: 5,000 grams of gold.
MAGNAY (on camera): So, this is worth 30 million yen, around $30,000?
TAISHIRO MATSUDA, GOLD PLAZA: Yes.
MAGNAY (voice-over): He says it's five times the volumes he had six months ago. Now, he's turning people away.
(DOOR BELL RINGS)
MAGNAY (on camera): That doorbell's been ringing constantly since we arrived. There's a waiting time of two hours, now, for people to get their gold seen. But seeing as there's a quick gap, I'm going to go and see much how my only piece of gold is actually worth.
MAGNAY (voice-over): Not much, as it turns out.
MAGNAY (on camera): I think I'll keep it, but thank you.
MAGNAY (voice-over): This lady is less sentimental about the gold that she has. "I did wonder whether I should sell it," she says, "but I thought it was better to have something I want now." So, she's off on a shopping spree. "I'm a spender," she tells me.
And spending's something the consumer needs to do more of if Mr. Abe's Abenomics is to return the luster to the Japanese economy.
Diana Magnay, CNN, Tokyo.
(END VIDEOTAPE)
DOS SANTOS: Let's have a look at how the US markets are faring at the moment. What we've got is stocks Stateside currently set for their worst day of trading in around about seven weeks today.
A lot of that doesn't just have to do with the slide of things like gold, but also it has to do with the fact that we've got data out today that showed that the Chinese economy, at least according to the latest set of numbers, is weakening a bit.
Obviously worrying for the United States, because remember that China is now the world's second-largest economy, just behind the United States and they're a big trading partner for them. As you can see, the Dow Jones Industrial Average down by in excess of 1.25 percent. We haven't seen that in quite some time.
Let's home in on one particular stock, a banking group in the United States that's also making news this afternoon. CitiGroup beat expectations in the second set of quarterly numbers under its new CEO. Let's have a look at them.
The banking giant made $3.8 billion in the first quarter of the year, as you can see there. That's up 30 percent from the same time last year. Citi's investment banking unit was the main reason for the jump in these numbers.
Consumer banking revenues were all-in-all basically flat, and the CEO, Michael Corbat, who took over only just in October, fears that a cost- cutting program for this company is on track these days. Investors seem to be pleased with the results, because CitiGroup shares are up around about 2 percent in New York. But as I was saying, otherwise, it's been slowdown big day for the markets there.
Well, after the break, a designer lounge chair and a David Beckham t- shirt. French ministers declare some of their assets, though some are rather more impressive, though, than others. We'll examine the case.
(COMMERCIAL BREAK)
DOS SANTOS: The personal assets of French ministers have been made public for the first time as part of the prime minister's plan to shake off a tax fraud scandal involving his former budget minister. After lying repeatedly about it, Jerome Cahuzac eventually admitted earlier this month that he'd hidden about $770,000 in a Swiss bank account.
Well, the French president, Francois Hollande, is also keen to shed the unpopular tag of "gauche caviar," that's the caviar left, otherwise perhaps known as champagne socialism in English. Jim Bittermann joins us now live from our bureau in Paris with the latest on this.
So, Jim, what have we learned from this interesting list so far? Presumably, it's been pretty revealing.
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well it has. We've learned a little bit about the gauche caviar, and -- or what they call them in the United States, the limousine liberals. In fact, there are seven millionaires in the government of Francois Hollande out of the 37 ministers.
Some of the things are kind of interesting and they're not particularly impressive at the size of the numbers but rather in how small they are. The interior minister, for instance, just says he has just 108 euros in his current account balance at his local bank.
Other things that were declared including a 4,000-euro designer chair by one minister. Another minister admitted that she has a David Beckham t- shirt, and that's got to be worth something. So, in fact, it's been revealing, it's been the subject of a lot of talk here. Whether it really means anything down the line, I'm not really sure, Nina.
DOS SANTOS: Let's go through some of those items and also get a chance for our viewers to look at them. We're talking about a designer Charles Eames chair, which is a pretty pricey item, some might say, bought for around about 4,800 euros or something.
But also -- the French president, Francois Hollande, has two apartments in Cannes, which is one of the most expensive Riviera -- French Riviera sights anywhere.
BITTERMANN: Indeed, and in fact, the winner for the most -- for the richest cabinet member is the foreign minister, Laurent Fabius. He has got wealth of over 6 million euros, about 2.5 million of that is just in his Paris apartment.
So, I think one of the things is that if you own real estate, especially in Paris, it's going to put you almost into the millionaire category just because the property prices here are so high. So, a lot of the ministers we found out are renting the places where they live.
Some ministers, for instance, have -- they had to declare family wealth, so we had, for instance, the minister of the elderly, she has a great deal of family wealth through her husband, and an estimate of her net worth is at about 5.5 million euros.
So, in any case, there's a lot of interesting detail in this, but once this is out, what I think a lot of people now are saying, this doesn't really mean much. What you really need to see are where are the ministers' incomes are coming from and whether they're making money off in the side or something like that.
Would this prevent another kind of scandal like the one that Mr. Hollande has just been through? Well, probably not because there's no check. There's supposed to be a kind of an audit of what the ministers have filed, but there's not really going to be a public check of what they've filed.
So, it is a -- it's still a kind of a murky area, but it will probably deflect some of the talk that's been going on after that scandal involving the budget minister, who was the man, in fact, supposed to be tracking down tax fraud, and he was found to be kind of a frauder himself, Nina.
DOS SANTOS: Well, that's what I wanted to come to here. Doesn't it smack of hypocrisy here? We've got a government that's come to power promising 75 percent tax on people who are in the millionaire's club, and then it turns out that they're millionaires themselves.
BITTERMANN: Well, in fact, Mr. Hollande said famously just before the election, while he was still campaigning, that he hated the rich. So, he's -- it is -- yes, it is a little bit of hypocrisy.
And one of the things interesting about this, too, is that it's brought the two political camps together. The right and the left are saying this is nothing but sort of economic voyeurism, that it really -- it really is not -- just looking into sort of the private affairs of the ministers --
(AUDIO GAP)
DOS SANTOS: OK, that's Jim Bittermann, there, reporting from Paris. Apologies for that. Obviously we had some communication errors at the end, but you certainly got his point.
Now, Interpol has issued an international wanted notice for one of France's most dangerous gangsters. Redoine Faid took guards hostage at gunpoint and also used explosives to blast his way out of prison. Fred Pleitgen has more on the jailbreak.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): The French government is calling the prison break an act of war, involving explosives to blast through the heavy doors, with four guards briefly taken hostage. All the work of this man, Redoine Faid, a well-known criminal mastermind. A witness to the escape described the scene.
UNIDENTIFIED FEMALE (through translator): I first saw a prison guard by, followed by someone dressed in civilian clothes. He was holding his gun to the guard's head, so I got a little scared and I hid in a room.
PLEITGEN: It's not clear how Redoine Faid managed to get explosives. France's justice minister rushed to the prison and says a Europe-wide manhunt is now underway.
CHRISTINE TAUBIRA, FRENCH JUSTICE MINISTER (through translator): There were no victims, thankfully. We came close to a tragedy, so I perfectly understand that the prison staff representatives voiced their worry, their anger, their fury.
Now, we start working together. That's what we have done for more than an hour and a half to examine problems, to hear their proposals, and then see what can be done in the present situation when, unfortunately, we don't have unlimited means.
PLEITGEN: Redoine Faid's criminal exploits have made him something of a celebrity in France. Known for robbing money shipments from armored trucks, he spent almost ten years in jail.
He says he models himself after the lead characters in movies like "Heat" and even saw the movies almost like instruction manuals for his heists. Faid's lawyer says he's not surprised his client broke out.
JEAN-LOUIS PELLETIER, REDOINE FAID'S LAWYER (through translator): It is also a young man remarkably intelligent, and he is using his intellect to serve his ambitions, and I think he has so may years in prison behind him that he thought it was one too many.
PLEITGEN: Now, Redoine Faid has all police forces in Europe looking for him after one of the most spectacular jailbreaks in recent history.
Fred Pleitgen, CNN, London.
(END VIDEOTAPE)
DOS SANTOS: Back to business news, now, and the stock markets in Europe have started the week in the red. All of the major indices closed lower in today's session. Energy and mining shares showing some of the biggest losses, which is why the FTSE 100, as you can see there, fared so particularly badly, down around about two thirds of one percent.
Xstrata and Antofagasta each lost more than 7 percent amid a slide in copper and gold prices that we've been telling you about, but also some of the oil prices down as well, and that was one of the reasons why Total missed it, and the CAC 40 also, declined 1.7 percent on the day.
The bolivar is named after Simon Bolivar, a revolutionary soldier from the 19th century. So, our question today is what else in Venezuela is also named after him? Could it be A, the main square in every town or city in the country? B, all the navy ships? Or C, the firstborn children of every Bolivar family? We'll have the answer for you later on in the program.
Well, speaking of currencies, the dollar is extending last week's declines against the Japanese yen. It's now down around about two thirds of one cent against the Japanese currency at present, as you can see, at 97.854. It's up, though, against the single currency, the euro, and the British pound.
(COMMERCIAL BREAK)
DOS SANTOS: Margaret Thatcher has paid for her funeral. Well, that's the line from the British government, which says that the rebate that she managed to obtain from the European Union during her time as prime minister has so far managed to yield around $115 billion.
The foreign secretary, William Hague, says that that number, quote, "puts into perspective the cost of laying her to rest this week," around some $15 million by some estimates. Much of that will be because of the large security presence at the procession from Westminster Abbey to St. Paul's Cathedral.
Baroness Thatcher is not having a state funeral, but it is likely to look very much like one, with much of the pomp and ceremony. In fact, it's just one step down.
In the very early hours of the morning, hundreds of police and servicemen did a run-through of what will actually happen on Wednesday. Jim Boulden explains.
(BEGIN VIDEOTAPE)
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): A sight last witnessed during the royal wedding in 2011: the military taking to the streets of London before the crack of dawn. This time, to practice the funeral of Margaret Thatcher. Her coffin will be borne by a gun carriage pulled by six black horses with full military honors.
Then there is the security. Demonstrations are planned. And terrorism can't be ruled out. Policing will involve shutting off much of London between Westminster Abbey and St. Paul's Cathedral during the morning.
It's what's called a ceremonial funeral, one step below a state funeral, and the question of costs has split the country in ways similar to Thatcher's legacy as prime minister.
UNIDENTIFIED MALE: I'm not entirely sure we should be having a state funeral at all. I think the family should have their private grievances as they're entitled to do so.
UNIDENTIFIED FEMALE: It's fine to show your respects to someone who's been a prime minister and was prime minister for a very long time, but it is a huge amount of money to find at a time when an awful lot of people are feeling the pinch very, very badly and where very important services are being cut back.
BOULDEN: Britain's last ceremonial funeral was in 2002 for the queen mother. London police estimated its cost at $6.5 million then, $3 million of that above normal running costs of policing London. And add to that the cost for the military, which was $450,000. That is, of course, in 2002 numbers. Then there is the expense of a big funeral in one of London's iconic churches.
DAVID ISON, DEAN, ST. PAUL'S CATHEDRAL: The cost of what happens inside the cathedral is -- it's there. We have to do overtime for our staff, the singers to be paid and all of those things. But it's not hugely excessive.
BOULDEN: Estimates for the Thatcher funeral are running as much as $15 million, according to media reports. But it's not clear where that number is coming from. The prime minister's office says the full cost to taxpayers will be disclosed after the event.
To critics of this ceremonial funeral, like the former Labour deputy prime minister John Prescott, whatever the cost is, it's too much.
JOHN PRESCOTT, FORMER DEPUTY PRIME MINISTER: It's outrageous. Everybody becomes a prime minister, a human being, anyway, is entitled to be respected. This is a woman who has destroyed an awful lot of our public services, has a hate against half the society -- she saw that about trade unions, millions of them -- and then she's getting this honor for Thatcher. No, no, no.
BOULDEN: Prescott says Wednesday will be a political propaganda exercise. But members of the government say it's a fitting event for such a great lady.
BOULDEN (on camera): Of course, when it comes to ceremonial funerals, the costs are what they costs are, and it's a little late to debate the fact once the person dies, so there are calls for new rules to be put in place for the appropriate way to honor the next former prime minister who dies.
Jim Boulden, CNN, London.
(END VIDEOTAPE)
DOS SANTOS: Up next on QUEST MEANS BUSINESS, Venezuela's president- elect seals victory with a razor-thin majority, and his opponent is not taking the news lying down. We'll have plenty more when we come back.
(COMMERCIAL BREAK)
DOS SANTOS: Hello and welcome back, I'm Nina Dos Santos. This is CNN, and on this network, of course, the news always comes first.
Hugo Chavez's hand-picked successor, Nicolas Maduro, has won a narrow victory in Venezuela's presidential election, but his opponent is calling the results illegitimate and wants a recount. Maduro got 50.7 percent of the vote, while on the other hand, Henrique Capriles Radonski finished with just over 49 percent.
Thousands gathered in central Pyongyang to mark the 101st anniversary of the birth of founder Kim Il-sung. Current leader, Kim Jong-un paid his respects at the mausoleum housing the bodies of both Kim Il-sung and also his successor, Kim Jong-il.
More than 30 bombings ripped across Iraq on Monday, just days before the nation heads to the polls for provincial elections. The wave of violence killed more than 40 people and wounded more than 250 others. No one so far have claimed responsibility.
Interpol says that it's now on the trail of a notorious armed robber who blasted his way out of a French prison. It's been two days since Redoine Faid made his daring getaway. The search is ongoing in all corners of the globe.
And finally, gold price is now down by more than $120 this very hour. In a space of just two trading sessions, the price of this precious metal has now fallen by more than 12 percent. We haven't seen a slide like that since 1983.
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(END VIDEO CLIP)
DOS SANTOS: As you just heard there in our main news roundup, the Venezuelan elections are very much gathering the headlines today because in Venezuela, it was a victory but only just with the man anointed to succeed the late Hugo Chavez. Nicolas Maduro secured 50.7 percent of the vote. Paula Newton in Caracas followed some of the noisy celebrations that followed.
(BEGIN VIDEO CLIP)
PAULA NEWTON, CNN CORRESPONDENT: This was not the victory that Chavistas were expecting (inaudible) expected to be this close, but it is a victory that they will take nonetheless. With this victory, they do expect that the policies of their hero, Hugo Chavez, will now (inaudible). (Inaudible) the poor, that means (inaudible) for the poor (inaudible).
These people right now (inaudible) right now all they care about is that (inaudible) candidate.
NICOLAS MADURO, VENEZUELAN PRESIDENT-ELECT (through translator): I won by almost 300,000 votes. This is the decision of the people, 7,500,000 men and women, whom I must respect.
UNIDENTIFIED FEMALE (through translator): I don't care that it was close. I thank God and my commander in heaven, Hugo Chavez, for letting his legacy continue with the victory of Nicolas Maduro.
NEWTON: Now the mood here at the headquarters where Enrique Capriles, the united opposition, is much more subdued, as you can see. Although many of the people here tell us they will fight on, they are taking their lead from Mr. Capriles himself. I want you to listen to what he had to say. He will not concede.
ENRIQUE CAPRILES, VENEZUELAN PRESIDENTIAL CANDIDATE (through translator): You are the loser. You and your government. And I say this with all the strength, all the commitment, all the transparency we are not going to recognize a result until every single vote is counted.
NEWTON: There is no expectation among (inaudible) Capriles will not concede. They expect that the opposition will accept this defeat (inaudible) Nicolas Maduro will be their president for the next six years - - Paula Newton, CNN, Caracas.
(END VIDEO CLIP)
DOS SANTOS: Well, staying with the world's emerging markets, China's economy grew faster than the government had been expecting, but it was still too slowly apace for many analysts. We found out that the Chinese economy, as you can see there, grew by 7.7 percent in the first quarter of the year compared to the same time last year.
But analysts have said we're expecting something closer to around about 8 percent and that's what helped to trigger the selling that we've been talking about not just in places like Asia but elsewhere around the world.
And staying with this BRICS theme, the Russian president says that we're currently in the midst of a global economic crisis that, according to him, quote, "is getting ever more dangerous."
Vladimir Putin, as such, has now ordered a special meeting of Russian economists in the hope of avoiding a recession in Russia. He told the prime minister, Dmitry Medvedev, that the economy will quote, "inevitably be hurt in the current climate." Well ,that's certainly showing signs of happening when it comes to the Russian stock market.
The RTS Russian index, as you can see there, in Moscow shows that the Russian markets have had something of a choppy first quarter of the year, down by more than 10 percent year-on-year so far. All of the gains that were made in the last few months of 2012, well, as you can see there, they seem to have been erased by the recent slide on the chart between March and April there.
And the RTS index was down yet again today around about a quarter of 1 percent, which doesn't bode well, does it, especially when the commodities markets are also sinking like a stone, because that is what this market is skewed towards.
Well, Russia's already managed to cut its growth forecasts for this year. Earlier today, I asked our correspondent Phil Black in Moscow what we should read into Mr. Putin's comments.
(BEGIN VIDEO CLIP)
PHIL BLACK, CNN CORRESPONDENT: It certainly means that things are not ticking along the way the Russian government would like them to be ticking along, Nina. Their preferred target for growth is around 5 percent. At the start of the year, they predicted 3.6 percent; so did the IMF.
Their thinking was then that is there is some promising news in the global economy, then Russia should continue to enjoy moderate growth. But that's not happening. And the latest forecast has been slashed all the way back to 2.4 percent for 2013, which is a big drop.
So the questions -- what's the problem, what's the cause here and what are they going to do about it? Well, through these comments, clearly the Russian government is trying to shift some of the responsibility towards international factors, which certainly played a big part in that big contraction in the Russian economy post the 2008 financial crisis there.
And those vulnerabilities certainly remain. The Russian economy is still structured in such a way where it is still very dependent, as we know, on exporting natural resources. And it is why so many economists believe the long-term answer here is in restructuring, diversifying, modernizing, improving the business climate.
But there is a very serious conversation taking place in the Russian government right now about the possibility of introducing some sort of fiscal or monetary stimulus to kickstart growth, perhaps even at the expense of containing inflation, which is running a little high at the moment, Nina.
DOS SANTOS: That's an interesting one.
The other interesting angle is that obviously Russia is looking east towards China, isn't it, because what we saw with Xi Jinping upon taking office in China, the first foreign trip he decided to make was to Moscow to visit Vladimir Putin. How much do we read into the tea leaves there, economically speaking, Phil?
BLACK: (Inaudible) of those European countries now who are looking to diversity their own energy sources or try to become more self-reliant and less reliant on Russian energy in particular, Russia has no choice but to try and diversify its client base as well. And so it is certainly looking east to power-hungry or energy-hungry China to try and make up some of that difference.
And these two countries have been negotiating a long-term gas deal for a while now. But it's made slow progress, although they're both quite committed to the idea. It's made slow progress largely because of differences on the issue of cost, Nina.
(END VIDEO CLIP)
DOS SANTOS: Phil Black there, reporting from Moscow earlier.
Up next, enormous phone bill? Well, guess what? There's an app for that, too. We'll tell you about the growing threat of malicious software on your own mobile phone.
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(COMMERCIAL BREAK)
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(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Time now for the answer to today's "Currency Conundrum" for you out there.
This is Simon Bolivar, the revolutionary soldier the Venezuelan currency is named after. And earlier in the show, we asked you what else in Venezuela is named after him? Is it A, well, we asked you whether it was every Venezuelan's town or city that has a place a bolivar, usually with a bust or statue of the national hero (inaudible). Yet it is A. So it wasn't a ship and it wasn't anything else that we asked you.
(END VIDEO CLIP)
DOS SANTOS: Let's change tack a little bit because we're going to head in to the world of technology. The number of new malicious mobile phone apps more than doubled last year, according to a survey released recently by NQ Mobile.
The security company actually discovered -- get this -- 65,000 new pieces of mobile malware in 2012. And as you can see, that's a staggering 163 percent from the previous year. (Inaudible) programs that was actually installed on quite a few people's phones unwittingly was called Bill Shocker.
NQ Mobile says that it was the most infectious, most costly app in history so far, ending up on more than half a million phones worldwide. And once installed, it could send text messages to premium rate numbers, hence running up enormous phone bills on people who were just using their mobile phone on a daily basis and were completely unaware.
Omar Khan is the co-CEO of NQ Mobile, and thankfully he joins us now live from CNN New York today, just what the data means and what we can do about it.
Great having you on the show, Omar.
How worried should we be about malware? The average person probably thinks it's not going to affect me, but boy, if you get one of those Bill Shocker bills, I bet you think twice.
OMAR KHAN, CO-CEO, NQ MOBILE: Well, absolutely, I mean, we're seeing -- we've seen hacking activity increase on mobile over the last several years. You know, last year we discovered that over 32 million devices, Nina, were infected around the world. The top five infected markets included China, Russia, India, United States and Saudi Arabia.
In the first quarter we've seen -- and now Thailand make the top five. So we're seeing quite a bit of activity. I think what's really happening is that we store more and more personal and sensitive information on our devices, on our cell phones. And in the emerging markets, it's our only lifeline to the Internet.
So hackers are finding that information more and more valuable, which is why they're going after these devices. And there's no reason to be afraid; we just have to be smart about how we protect ourselves. You have to have passwords on our phone. We should install security solutions, like NQ Mobile Security as well as encryption solutions. So there's ways to protect ourselves in this environment.
DOS SANTOS: The other thing is is that they seem to be going after specifically the Android devices, and that's especially worrying, considering as Android has the largest share of the market in terms of operating systems.
KHAN: Yes. I mean, what they're doing is they're going after traditional hacking activities that they've perfected on the PC side and bringing them over to the mobile, such as SMS phishing, or something we call smishing. And what we're seeing is that, you know, Android is one of the most powerful operating systems in the world. It allows developers to develop some of the most innovative applications out there.
But because it's so open, it's also -- gives the opportunity for bad actors in the system to take advantage of that openness to develop malicious applications as well. But we're seeing more and more phishing activities through the mobile browser as well as through SMS as well. So it's not just focused only on Android, even though app attacks have historically been focused, up until now, on the Android platform.
DOS SANTOS: So what can businesses do just generally to try and counter this trend, because obviously as you were just saying (inaudible) all these developers in different countries developing apps to go on the Android system. And then people get nervous at the Android system can actually be prone to malware attacks.
People need to invest in security as well. When they're developing these apps.
KHAN: Well, absolutely. I mean, Android's that operating system actually very secure. They've done a good job of securing the platform itself.
You know, what we need to do as consumers at enterprise is, one, we need to make sure only half of consumers even lock their device, Nina. And the simplest thing we can do is put passwords on our phone, so if they're lost and end up in the wrong hands that our data doesn't fall into the wrong hands.
Installing security and encryption solutions such as our own NQ Mobile Vault or NQ Mobile Security, among others that are out there as well, is a way to do it; and then also just educating our consumers and our enterprise users not to connect and leave open wi-fi connections or Bluetooth connections, only to connect to trusted sources.
A lot of times we'll connect to anything. And we have to be very smart about what we connect to.
So it's about awareness and empowerment. I don't want consumers to fear the use of their mobile devices. I want them trust because if you think about the next five years, we're going to be doing mobile payments, mobile health care. The applications are going to skyrocket in terms of how we're using these devices. We want consumers to feel secure in that environment.
DOS SANTOS: Excellent point. Omar Khan, thank you very much for joining us there from NQ Mobile, running us through some of those more worrying malware apps that seem to be filtering through onto some of our Android devices, as you were saying before.
Well, some of you use your mobile phone to check up on the latest weather forecast, don't you, especially if you're a business traveler out there.
Let's go over to our very own Tom Sater, who's at the CNN International Weather Center with the full picture.
And you'll thankfully not virtual.
TOM SATER, AMS METEOROLOGIST: Yes, thank goodness.
I was going to ask you, though, Nina, how did you enjoy the warm day yesterday? You hit 20 degrees -- was it nice?
DOS SANTOS: It's been wonderful, I've got to say, barbecue weekend, only one day, though.
SATER: All right. Get ready for the spring garden. Twenty degrees, though, is the warmest day that London has seen in nearly seven months. I mean, it's got to go back to the 16th of September. Paris, you ended the day at 25 degrees.
You go back to the 22nd of October. Now we do have a couple of weather systems we're watching. One is quite potent. In fact, I'm going to show you a radar in a moment. We've got a line of severe weather that could produce some straight-line winds. We'll be watching that one and maybe some disruption to air travel.
Speaking of disruption to air travel, a spinning area of low pressure in west central areas of Turkey, so look for possible delays out of Ankara or Istanbul, even Beirut over toward Athens. So this one's going to sit for a while and produce some scattered light amounts of rainfall; another one moving up into the south here. You can see in northern areas of Africa.
But let's talk about the numbers, because really, this has been the big story. Currently, you know, 23 in Madrid right now; it's 18 in Paris, 20 in Munich, Kiev is 8. We're going to watch the warmth slowly slide to the east. But Berlin, you have the honors today at 23 degrees, a good 10 degrees warmer than average.
Paris, 20; 17, Amsterdam; London, a little bit cooler, but still 15 is 1 degree above average. But as mentioned the warmth is going to start to slide. And what we're going to find is even though winter has been behind about a month, the spring flood season's a little bit behind as well. This shouldn't cause much in the way of flooding.
But it is going to really kick up the winds a little bit, look for possible delays of flights out of Dublin, Glasgow, Belfast as well.
And but the line of severe weather I'm watching, you're going to see - - and it really starts to develop here; it was much brighter just moments ago. But we do have a few embedded little thunderstorms moving in toward the southwest. So Mother Nature may make all racket, let's say, overnight tonight.
Take a look at London, though. Here's the way things are shaping up. You are going to cool down back behind that rainfall. But that's not going to be until late Wednesday into Thursday. Berlin, you're going to see your numbers unseasonably warm -- it's about time. It's payback for the enduring winter you've had to go through, 22 by Thursday.
But Warsaw, this is where we're going to find a little bit of an issue here. Yes, it's nice to warm up. But let me show you some pictures. Because of all this snowfall that we've had this winter, we have so much tremendous flooding.
In fact, rivers in 10 provinces are above the alarm state here in Poland. The river Nurzak (ph) is 80 centimeters above the alarm state; levels are high on the Vistula River. But no threat just yet, however; they are monitoring this and many residents do however remember the flood of 2010, when the Vistula broke through a dike.
So again, a little bit of a misery as we take a look at spring. But at least winter has seemed to have fallen by the wayside right now, and we're going to enjoy some nice numbers here, Nina, for a few days and possibly the next season. Though it's about time.
DOS SANTOS: Hey, look, even if it does rain, it was snowing two weeks ago (inaudible) I'm fine with the rain as long as it's slightly warmer. Thanks so much for that, Tom Sater there at the CNN Weather Center.
Well, starting a career, any career, is, of course, one of life's biggest challenges, isn't it. Let's just face it. Even getting the job during these difficult times can be tough in itself. Well, here on QUEST MEANS BUSINESS, we want to know just how tough things are out there.
We're launching a new series profiling young people starting out in life, whether you're an intern or an apprentice or a new graduate just looking for a break on the career ladder, if you're risking it all to start up your own venture, we want to hear you. So email us at startingout@cnn.com. Tell us what you're doing and why you'd like to take part in this new show.
Well, as gold prices lose their sheen, we'll take a look at what this means for precious metal traders. That's next.
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DOS SANTOS: (Inaudible) say that the court there has ruled the former president, Hosni Mubarak, can be released as he awaits trial unless, though, he faces other charges. And here's the problem: he does actually face other ones. There are new corruption charges, so he's to remain in custody pending the investigation until that.
In addition, the former president faces more accusations over his role in the killing of protesters during the 2011 revolution that toppled him.
Speaking of Egypt, it has sold $600 million to local banks that need the U.S. currency to pay for imports into the country.
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DOS SANTOS (voice-over): Well, the dollars will be used to pay for food, cooking oil, machinery and other goods and essential items.
Egypt's own reserves of foreign currency have fallen sharply. And just in December, well, the country started limiting the number of dollars available to the private sector. It's how regular currency auctions since then to try and provide small amounts to buyers. Monday's sale was almost 15 times the size of any previous auction. But some traders still think it wasn't enough to satisfy demand.
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DOS SANTOS: Well, to the country where the Arab Spring began, and it's taken another bold step into the future.
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DOS SANTOS (voice-over): The Tunisian government official says that his country has reached an agreement on a precautionary loan from the International Monetary Fund. Well, this comes at 13/4 of a billion dollars and it would only be used in case of emergency, financing need. Well, the deal is to be signed in a few weeks from now after some of the details are eventually worked out.
As I've been telling you throughout the course of this show, the price of gold is plunging to a new two-year low this very session. Right now the precious metal is trading at more than $120 an ounce down, as you can see, at a price of $1,366.
A slowing Chinese economy is one of the major factors at play here, which could mean lower demand for this metal. Our Miguel Marquez spoke to a precious metals dealer in Los Angeles to see if there's a flip side to these kind of falling prices.
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KEN EDWARDS, BUSINESS OWNER: I'm an optimist because I'm pessimistic, exactly right.
MIGUEL MARQUEZ, CNN CORRESPONDENT (voice-over): Ken Edwards has spent a lifetime investing and building a business based on precious metals.
EDWARDS: This is 1,000-ounce bar.
MARQUEZ (on camera): Don't hurt your back.
EDWARDS: This weighs 70 pounds.
Don't hurt your back.
MARQUEZ: Oh, my goodness.
MARQUEZ (voice-over): Today, the luster is off not only silver but Edwards' main investment, gold.
MARQUEZ (on camera): We are visiting you on a day when gold has dropped more than $60.
EDWARDS: So far, yes.
MARQUEZ: So far. Not a good day for you.
EDWARDS: Oh, no, it's all good.
MARQUEZ: Why is it all good?
EDWARDS: Because all my products are on sale.
MARQUEZ (voice-over): In the world of gold investing --
UNIDENTIFIED MALE: $8,794.
MARQUEZ (voice-over): -- always a silver lining. Edwards expects gold prices to recover and rise like never before. He, like many gold investors, expects inflation to increase dramatically in the future because of monetary policy today.
EDWARDS: The monetary easing that the Fed is doing, that the Japanese are doing is unprecedented. And, you know, we're heading into waters that are uncharted.
MARQUEZ (on camera): And uncertainty drives gold prices --
EDWARDS: Yes, sure.
MARQUEZ: -- up.
EDWARDS: Up, yes.
MARQUEZ (voice-over): During the rush back in 2011, gold traded at nearly $2,000 an ounce. Today, America's gold reserves have lost tens of billions of dollars in value as investors find there's more money to be made in housing and the stock market.
EDWARDS: And those are platinum.
MARQUEZ: Ken Edwards, in the business since 1977, has seen it all before.
EDWARDS: That feel that you feel is what people fall in love with when they get into gold.
MARQUEZ: Yes.
EDWARDS: You know, once they start, they never stop.
MARQUEZ (voice-over): He says he'll keep buying and keep the faith that gold prices will head north eventually -- Miguel Marquez, CNN, Los Angeles.
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DOS SANTOS: Well, it's been a bad day if you've got gold in your portfolio. And it's even worse news that people like Datta Phuge (ph) here, who may be the world's ultimate gold bug, as you can see, he's from India, which is the world's largest market for the precious metal.
And as you can see there, he's wearing a shirt that is literally worth its weight in gold, because it's made up of 14,000 pieces of solid gold, weighing more than 3 kilos in total. Gold peaked back in August of 2011. That shirt would have been worth almost a quarter of a million dollars.
Well, with gold now down more than 25 percent from that peak just two years ago, as you can see, his shirt is now worth a mere $160,112. Well, it's not that bad, but I bet he's not the kind of guy who says, well, if gold goes back up, I'll eat my shirt, because it could give him quite a bit of indigestion.
We'll have a full check of the stock markets after the break.
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DOS SANTOS: Hello and welcome back. Sprint Nextel, America's third biggest cell phone company finds itself at the center of a bidding war tonight.
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DOS SANTOS (voice-over): The U.S. satellite provider Dish Network has put $25.5 billion on the table to ward off a deal that's already been struck with Japan's Softbank. Dish's counteroffer would give it a foothold in the wireless market. Let's have a look at how shares in Sprint have been doing because that absolutely soaring off the back of that takeover speculation as you'd expect, up around about 14 percent.
But the thing is, it's certainly an exception in today's session, because as you can see, the Dow Jones industrial average is actually pushing towards losses of around about 170-200 points on the Dow at the moment, down around about 1.2 of 1 percent. A lot of this has to do with disappointment over China's growth numbers, with the first quarter that came out earlier today.
On the upside, though, Citigroup's net profit did rise 30 percent in the last quarter. But of course, it's going to be a big week for banking earnings as well in light of what Citigroup said. We've also got Goldman Sachs, Morgan Stanley and Bank of America all due to report later on this week. So certainly a barometer of health on Wall Street.
Well, that's it for this edition of QUEST MEANS BUSINESS. Thanks for joining me. I'm Nina dos Santos. I'll be back with (inaudible) headlines (inaudible).
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DOS SANTOS (voice-over): Hugo Chavez's handpicked successor, Nicolas Maduro, has won a narrow victory in Venezuela's presidential election, but his opponent is still calling the results illegitimate and has said wants a recount. Maduro got 50.7 percent of the vote while Enrique Capriles finished with just over 49 percent.
Thousands gathered in central Pyongyang to mark the 101st anniversary of the birth of the nation's founder, Kim Il-sung. Current leader Kim Jong-un paid his respects at the mausoleum that also houses the bodies not just of Kim Il-sung but also of his successor, Kim Jong-il.
More than 30 bombings ripped across Iraq on Monday just days before the nation heads to the polls for provincial elections. The wave of violence killed more than 40 people and wounded another 250.
Interpol now says that it's now on the trail of a notorious armed robber who blasted his way out of a French prison. It's been two days since Redoine Faid made his daring getaway. And the search is still going on on all corners of the globe.
In the financial markets, gold prices are down more than $120 this very hour. In the space of just two trading sessions, the price of bullion has now fallen by more than 12 percent. We haven't seen that kind of slide since 1983.
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DOS SANTOS: That's a look at some of the top stories on CNN. "AMANPOUR" is next.
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