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Quest Means Business
Italy Signals for Growth; Italian Bond Sale; Shaky Political Union; US Markets Rise; European Markets Higher; Austerity Outlook; Bangladesh Building Collapse; UK Retailer Primark to Compensate Victims of Collapse; AEG Michael Jackson Wrongful Death Trial
Aired April 29, 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: In Italy, a grand coalition is formed, and it has grand plans for growth.
Leaving before he's pushed. The man credited with Santander's success has stepped down before being banned.
And under pressure over the Bangladesh tragedy. Primark has promised compensation.
I'm Richard Quest. We start the week together and yes, I mean business.
Good evening. "We will die of fiscal consolidation alone. Growth policies cannot wait any longer." Those are the words of the new Italian prime minister as he forces austerity onto the back burner.
The markets liked what they heard, or at least they didn't take fright. The bond market's giving the government a vote of confidence. The ten-year yield has fallen below 4 percent. Last July, it rose nearly -- to nearly 7 percent.
Enrico Letta's arrival ends two months of political stalemate. Questions remain how long the coalition may last and exactly how he is going to remove that austerity.
(RINGS BELL)
QUEST: Ben Wedeman is in Rome for us tonight and joins me live. Ben, is an anti-austerity drive from the new prime minister, or is he dancing around the issue?
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I think what Mr. Letta was trying to say, Richard, is that Italy cannot live by austerity alone. He wants to temper the measures, the tax increases and the cuts in social spending of his predecessor, Mario Monti, with some form of stimulus.
And he says he's going to make a tour of European capitals, especially those in the north of Europe, to try to convince them to switch gears a bit. But -- and in fact, he said that he's giving himself 18 months.
And let's not forget that a normal Italian government, if it were to live out its proper lifetime, should last for three -- five years. But he's saying in 18 months, if he does not turn around the Italian economy, he will, in his words, face the consequences.
But today, we were outside in one market in Rome, and what we saw was many Italians are wary of politicians bearing promises.
(BEGIN VIDEOTAPE)
WEDEMAN (voice-over): In the market of Rome's working class Monteverde Vecchio neighborhood, they pick their produce carefully. Prices are up, incomes aren't. Politicians, on the other hand, are a dime a dozen.
"Between petty thieves, thieves, and big thieves, who would you vote for?" asked Federico, the fruit vender.
Italy's two-month political stalemate is over. Prime Minister Enrico Letta has joined his center-left Democratic party with Silvio Berlusconi's People of Liberty party to form a government of cats and dogs, joining old enemies to pull the country back from the edge of a political abyss.
"We had to have a grand coalition because there was no will for change," says Lino, who sells vegetables.
"Let's hope these parties can come together and do better," says Carlo, the butcher, "but I don't believe they will."
It was a shotgun marriage intended to ward off the threat posed by this, man, comedian-turned-politician Beppe Grillo and his stridently anti- establishment Five Star Movement, which shocked the old politicians by grabbing a quarter of the vote in February.
"They worry about this shaggy-haired rabble-rouser's growing appeal," says political scientist James Walston.
JAMES WALSTON, POLITICAL SCIENTIST: Both the center-left and the center-right, they're terrified of Grillo, because he's been stealing votes, large numbers of votes, from both of them.
WEDEMAN: And why should the world pay attention to this tempest in an Italian tea pot?
WALSTON: The economy. Italy is the third-biggest economy in the eurozone, the fourth-biggest in the European Union, and if Italy's economy goes badly or disastrously, then it's bad for the European Union, and that's bad for the world.
WEDEMAN: In 2012, the economy shrunk by 2.4 percent and is expected to shrink again this year.
(END VIDEOTAPE)
WEDEMAN: Now, Mr. Letta's government, Richard, is the 66th ruling Italy since the end of the second World War, so let's keep that fact in mind as we listen to his promises to parliament today. Richard?
QUEST: All right. So, give me an assessment, Ben. Not so much on his policies that he says he's going to put forward, but the solidity of that coalition to last more than a couple of months. What could be the catalyst to bring it down ?
WEDEMAN: Well, it's shaky to start with because the -- Mr. Letta's Democratic party is already very split over the fact that the leadership of the party has made a deal with the devil, in the opinion of many of them, with Silvio Berlusconi's People of Liberty party. So, we've seen split on that side.
And on the other, it's not clear how long they're willing to carry on this shotgun wedding, so to speak, this shotgun marriage that they've pulled off. This is the left and the right together. And really, as I said in that report, uniting against the Five Star Movement, which is just utterly opposed to the old political class here in Italy.
So, if this government, this hybrid government is not able to yield any real results, Beppe Grillo and his Five Star Movement are simply going to become more popular and likely to throw an already turbulent political environment into -- we could say chaos. I don't know if I want to go that far, but certainly into even more turmoil. Richard?
QUEST: Ben Wedeman, there may be chaos and turmoil, perhaps or possibly in Rome, but looking at the evening tonight, it looks like a very fine Roman evening to enjoy, at least weather-wise. Ben Wedeman, who is in Rome.
Now, you might be surprised, of course. The markets, which don't like instability and uncertainty, investors were certainly pleased with clarity in Rome, possibly with an ECB rate cut, which could also come this week, is encouraging. And US home sales came in better than expected. Look, the numbers came in even before --
(RINGS BELL)
QUEST: -- I did that. Up 128 on the Dow. Look at that. Getting towards 15,000. Not there yet, and a gain of the best part of 1 percent.
European markets also had a good session. The FTSE, the DAX, the best gains, not surprisingly, were the best performers comes from the MIBTel, that was up 2.2 percent.
All in all -- if you take a look at the FTSE -- let's look at the Paris CAC 40 in a little bit, or the FTSE -- again, you see a very stable sort of trading during the course of the day, and I'm guessing the Paris CAC 40, with just a slight gain towards the end.
The markets clearly had been dragooned by what they saw happening in Italy, and despite the worries of what might take place, I asked Bob Parker from Credit Suisse, look at the coalition, and if it -- look at it as being so unstable. The markets seemed OK.
(BEGIN VIDEO CLIP)
BOB PARKER, SENIOR ANALYST, CREDIT SUISSE: We have no idea whether this coalition will last for three months, six months, or perhaps longer. But Italy obviously does have a tradition of very short-lived governments.
So far, as you say, the market has given the new government the benefit of the doubt, and you see that in the bond markets, ten-year Italian government bond yields below 4 percent, that's at a very low level compared with what we've seen over the last year.
QUEST: But why is it giving it the benefit of the doubt?
PARKER: Well, I think a number of reasons. The first reason is that Italy this year will actually be one of the few eurozone economies with a budget deficit of less than 3 percent, and that's the mastery limit, and that compares, for example, with Spain, where the budget deficit is going to be 6 percent, plus France, where the budget deficit will probably be somewhere close to 4 percent. So, that's factor number one.
Factor number two is that the Italian debt office has managed Italian debt very well, because a lot of its debt is very low maturity. So, as a result, there is very little debt this year coming up for refinancing.
QUEST: So, you would not say that Italy is a concern now? Or at least the concern is assuaged?
PARKER: Certainly the concern has been reduced. We still own Italian government bonds. And I'm actually quite comfortable owning Italian government bonds. Having said that, what's the major negative? Italy is still in recession, and that's why this new government has got as its top priority a plan or a series of plans to come up and getting out of recession.
QUEST: If we turn to Greece, the law has now been passed, 14,000 or so civil servants will lose their job.
PARKER: Yes.
QUEST: Two thousand almost immediately. Another two thousand by the end of this year.
PARKER: Yes.
QUEST: Now, this -- whatever the Troika justification for it, in classic economics, this is just going to continue the downward spiral. It must do, 14,000 people and now many more worried about their futures.
PARKER: Well, unemployment in Greece currently close to 27 percent.
QUEST: And likely to go to 30 percent.
PARKER: Well, under these plans, I think over the next six months, you probably will see Greek unemployment of 30 percent. Now, in contrast to other bailout countries, like Portugal and Ireland, Greece has got a contracting public sector, but the private sector is not expanding.
And you've basically got a private sector contracting, a public sector contracting, the economy's still in deep recession. And let's not forget, over the past five years, the Greek economy has now contracted by close to 13 percent. And this year, it might contract by another 5 percent.
QUEST: So, can we say that in this austerity debate, which rages and for which, perhaps, we will never have an answer until it's all over and we can look back at the numbers. But in this austerity debate, there is nothing that would suggest that for Greece, it's the rest policy forward.
PARKER: Well, I think Greece has to do different things. It has to have a program to attract, like Portugal has done and like Ireland has done very successfully, it has to attract foreign investment. It has to take action, whether it be tax action, or structural reform action, for example, on pensions and the labor market, to encourage growth in the private sector.
You've seen that in Ireland. You are starting to see it in Spain. You're seeing it in pockets in Portugal. So far, Greece, as we've said earlier, the public sector's contracting, and the private sector's contracting. The net result of all of that is this vicious circle of this upward spiral in unemployment. Clearly, that is an unsustainable situation.
(END VIDEOTAPE)
QUEST: Bob Parker on the issues in Europe at the moment. Coming up on QUEST MEANS BUSINESS, moves to compensate victims of the Bangladesh factory which collapsed, claiming the lives of hundreds of garment workers. Jim Boulden will be with me after the break.
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QUEST: The prime minister of Bangladesh, Sheikh Hasina, has visited the site of last week's factory collapse near Dhaka.
Four hundred people are now known to have been killed in the disaster. Hundreds more people are still missing, and officials say they no longer expect to find anyone alive. So now, the rescue operation has become one of recovery and is now using heavy lifting gear to clear the site.
The building's owner has appeared in court. Mohammed Sohel Rana was remanded in custody for 15 days. He'll be questioned over allegations of negligence, illegal construction, and persuading workers to enter a dangerous building. Apparently, the garment workers were told to come into work even though cracks had started to appear in the building.
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RIA BEGUM, SURVIVOR (through translator): We did not want to go up in the factory this morning, but the management forced us to go up and said there was no problem with the building. Just after I sat on my table to work, the building just collapsed. I could not even leave. I was trapped on my table.
(END VIDEO CLIP)
QUEST: The UK retailer Primark says it will compensate victims of the factory collapse who work for its supplier. Primark says this will include longterm aid for children who've lost parents in the disaster. Jim Boulden joins me now. This came out late this afternoon, Jim.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Yes.
QUEST: What -- give us some more details.
BOULDEN: Well, there've been pressure on companies like Primark who do an enormous amount of business in the UK, Walmart in the US as well, who use suppliers in Bangladesh and sell clothing very cheaply.
I went to Primark today, two pounds, three pounds for t-shirts for children, which is $2, $3, $4. It's an extraordinarily cheap price. And the way they're doing this, of course, is by finding suppliers in places like Bangladesh.
Now, what the companies have said all along is that they have monitors on the ground who look at these companies, looking at the suppliers --
QUEST: But before we hear your report in a second, just to confirm, Primark is one of those companies, along with others --
BOULDEN: Yes.
QUEST: -- that did source --
BOULDEN: Absolutely.
QUEST: -- that did source garments --
BOULDEN: Yes.
QUEST: -- from this factory.
BOULDEN: But this was a number of factories in the building, so what Primark is saying specifically is for its supplier, and it's calling on other retailers to come forward and offer assistance, because this will not go to every single person in that building, it would go to those who were working on Primark products at the time.
And of course, NGOs, non-governmental organizations, have been pushing for this kind of compensation, so it's a big step that Primark has taken, because of course, companies are very much in the frame when it comes to these kinds of disasters. Take a listen.
(BEGIN VIDEOTAPE)
BOULDEN (voice-over): Some 400 dead, hundreds still believed to be missing. Garment workers in Bangladesh paying the price for cheap clothing.
Arrests were made over the weekend, including this man, Sohel Rana, the owner of the collapsed building that housed many garment factories. Still, there is plenty of blame to go around.
RUTH TANNER, WAR ON WANT: And this tragedy can't go unnoticed. This has to be a turning point. Companies have to take action immediately to support the families of the people who were killed and injured.
BOULDEN: A number of Western labels and retailers use the factories once housed in this building. British retailer Primark said in a statement, "Primark has engaged for several years with NGOs and other retailers to review the Bangladeshi industry's approach to factory standards. Primark will push for this review to also include building integrity.
Primark face a small protest this past weekend at its flagship Oxford Street Store.
BOULDEN (on camera): But it's not always clear where our clothes are made. Many don't come with labels of origin. And NGOs say, anyway, they don't want to see a boycott of the Bangladeshi garment industry. So, what do consumers think?
UNIDENTIFIED MALE: I don't know many people who really think about where their clothes come from, do they?
UNIDENTIFIED FEMALE: I don't think that Primark can be 100 percent held for responsible for it. In that case, we're all held responsible for anything we buy.
UNIDENTIFIED FEMALE: It will prey on my mind for a while, and then you'll end up going back to what you can afford.
BOULDEN (voice-over): Bangladesh is a poor country in which clothing accounts for 77 percent of export. But Oxfam, for one, calls its garment industry "dangerous, low-paid, and exploitative. Workers were given a rise in 2010 to a minimum $38 a month. Oxfam wants an increase to more than $60 a month.
For their part, retailers and Western labels say they have monitors in Bangladesh to check on factories and to make sure they comply with pay and conditions. But they rely on the government to inspect buildings.
CHRISTIAN VON MITZLAFF, BUSINESS SOCIAL COMPLIANCE INITIATIVE: We're not going into the building safety in terms of construction safety. That is not part of our social auditing.
BOULDEN: Bangladesh now says it will inspect all garment factories. At the Rana Plaza building, loved ones still wait for word if any more survivors are found.
(END VIDEOTAPE)
QUEST: Jim, that lady says we're all responsible for what we buy. And that means that you, you, you, me, we all of us, we have to be prepared to pay more.
BOULDEN: Yes.
QUEST: The Primark answer of $3 a t-shirt is --
BOULDEN: Very successful.
QUEST: It's very successful, but that's the problem.
BOULDEN: Well, people are literally saying that those in places like Bangladesh are dying on the back of us being able to buy cheaper clothes. It is that stark --
(CROSSTALK)
QUEST: We cannot -- we cannot --
BOULDEN: -- it's that stark of a --
QUEST: -- destroy that link, Jim, no matter how uncomfortable it may be --
BOULDEN: Yes.
QUEST: Between that 3 pound t-shirt or $3 t-shirt and what happened in Bangladesh.
BOULDEN: And the companies say, look, we have monitors in there, you heard that chap there who's in Bangladesh, and he's saying we don't actually look at the buildings.
QUEST: Right.
BOULDEN: That's what's going to have to change.
QUEST: We have to leave it there. We'll talk more about this.
BOULDEN: Yes, absolutely.
QUEST: Stay on this one, please, Jim. Coming up after the break, to Los Angeles, California, the trial to establish who's financial liable for death of Michael Jackson. The trial has begun, we're in LA after the break. QUEST MEANS BUSINESS.
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QUEST: Opening statements are underway in the Michael Jackson wrongful death trial. His mother is suing AEG Live on behalf of three children. The lawsuit claims the concert promoter was liable in the pop superstar's death in June 2009. Kyung Lah is with us from Los Angeles for us tonight, where the trial is taking place.
We'll get to the details of the trial in just a moment, Kyung, but how are they going to prevent it -- looking at what's happening behind you -- how are they going to prevent it from turning into a circus?
KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT: I think it's really difficult to do, Richard, because you're talking about something that when people arrive, and we actually caught video of Katherine Jackson, the matriarch of the family, arriving, you could see all the cameras swarming around. These cameras are primarily local news media here in Los Angeles, and you can barely see her through all of this mess.
Wherever the Jacksons go, there is intense media scrutiny. There is also a lot of public scrutiny, and what is going to make this quite interesting to people who follow the Jacksons is that there's going to be evidence admitted here that has not been previously heard before, details about Jackson's addiction, details about his other criminal trial, where he was accused of molesting children.
Some things that we have not heard before are going to be heard because this is a civil case. So, trying to control that circus is going to be quite difficult. The judge has already said that opening statements, which are underway right now, will be limited to 2.5 hours per side. She's trying to make this as tight as possible.
But Richard, I can tell you, from having sat inside this courtroom, a small, very warm courtroom, the attorneys clearly don't like each other, and they are clearly going to take as many jabs at each other to try to make as many headlines as possible. Richard?
QUEST: And on this point of course, unlike a criminal trial, where the burden of proof is beyond a reasonable doubt, here in a civil trial, it's the balance of probability. It's a much lower standard. So, is the feeling that that lower standard -- I suppose -- look, I'm dancing around, here Kyung. I'm dancing around. What's the -- do people believe --
LAH: You're getting it.
QUEST: Well -- do people believe the plaintiff has a strong case here? Because from overseas, people look at this and say they haven't got a hope. Why should AEG Live pay a penny?
LAH: Well, the fact that the judge -- and you do mention that lower standard, it is important to note here, because this is an American civil trial, there is certainly a lower standard than a criminal trial, and the perception overseas may be, oh, they haven't got a prayer in the world. But the fact that the judge has allowed this case to go forward, there is a window of opportunity for the plaintiffs.
Let's talk about the details of this case. This is Katherine Jackson, the elderly matriarch of the Jackson family, 82 years old. She is going to be bringing up an emotional case representing three of Jackson's minor children.
We've already seen -- I was snooping over the shoulder of one of the attorneys, and I could tell, the case that they're laying out, and we got a sense of it in the opening statements already, is that they're going to show pictures of Jackson surrounded by his three children at birthday parties, a loving father, a man -- a worldwide entertainer who had an injury in the 80s and became addicted to pain medications. That's the picture they're going to paint.
And then, they're going to try to hook AEG Live, a company with deep pockets, into billions of dollars of payouts. What the plaintiffs are saying is that AEG Live essentially is a money-grubbing company that saw performances before the health of a performer.
And so what AEG Live is saying, and we're expecting this from opening statements from AEG Live when it happens later today, that this was something that was concocted by Michael Jackson, the author of the death here is the dead man himself.
And certainly, Richard, what we are also getting is that what will be on trial here is going to be Michael Jackson's celebrity. One of the first opening clips played by the plaintiffs was Michael Jackson dancing. Richard?
QUEST: Kyung Lah, who will spend longer in court than -- over the next few weeks then perhaps is honest or decent. And talking of that, the idea of money-grubbing companies on a business program? Kyung Lah, keep us informed about those money-grabbing companies -- or grubbing companies -- in the days ahead. We're going to watch that case very closely for you.
The eurozone's biggest bank has a brand-new chief executive, and we're none the wiser as to why the old one left. We'll explain the Santander conundrum after the break.
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RICHARD QUEST, CNN HOST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
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QUEST (voice-over): The Syrian prime minister Wael al-Halki is said to be unharmed after a bombing attack on his convoy on Monday. It happened in the upscale part of Damascus that's home to foreign embassies, government buildings and the private residences of some top regime members.
The Afghan president Hamid Karzai has admitted taking payments from the CIA. Mr. Karzai says U.S. intelligence officials had made small payments in the Afghan government for 10 years. And Sunday "The New York Times" said the CIA had paid tens of millions of dollars in secret payments to maintain influence over the government.
As you heard earlier, rescue workers in Bangladesh are now using heavy machinery to sift through the wreckage of a building that collapsed. That signaled that the search for survivors may be over.
Meanwhile Bangladesh has just announced it will inspect the safety of all garment factories.
These are the first images of Nelson Mandela since his birthday last year. The South African president Jacob Zuma went to visit Mr. Mandela today and says the 94-year old is in good shape. Mr. Mandela recently spent more than a week in hospital being treated for pneumonia and was discharged in early April.
There were some tense moments in central Prague today after a powerful explosion forced hundreds of people to evacuate buildings. Thirty-five people were injured. The mayor says it was a gas explosion and not a terrorist attack.
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QUEST: The head of the Eurozone's biggest bank, commercial bank, has quit without an explanation. It's all happening at Santander, where Alfredo Saenz has resigned as chief executive of the company. No official reason has been given, although Saenz was facing the prospect of being banned from the financial sector over a conviction he had for false accusations when he was running another bank.
Now that happened many years ago in 1994. Of course, the fact he's resigned makes the potential ban a moot point.
The question, of course, as he left -- nobody would say what the relationship between the ban and the resignation was. But this is the man who's taken over, a younger man, Javier Marin, who was the head of the asset management brand.
And the important thing here is that Saenz is 70; Marin is 46. And if you look at the share price, it's only been a tip here for Santander. The share price is down almost 9 percent over the course of the year. It's underperformed compared to the rest of these Spanish banking sector.
However, if you look down there, but look, this today, that's a little boost and a little gain. They seem to like what they saw, investors, as a result.
This wasn't the only news Santander coming from the banking sector. Lloyd's is getting out of the Spanish banking sector and it took a huge hit in the process. This is Lloyd's TSB, owned by the U.K. government, of course, nationalized after the crisis in 2008.
But as it gets out of the Spanish system, it's selling its Spanish arm to Banco Sabadell. The total losses are 338 million. The bank is trying to scale back international operations, retreating back to its core base.
Stay with banking. JPMorgan Chase, the co-chief operating officer has resigned. He's Frank Bisignano. He is known as Jamie Dimon's Mr. Fixit. He -- the joint operating officer goes, leaving the payments company first data.
And these are the banking shares to keep an eye. JPMorgan Chase, having lost the co-COO, just a small gain. And maybe that's an indication Lloyd's Group up 1.12 percent, Santander up 2 percent. So lots of news in banks. And the markets seeming, at least in those two, liking what they see.
Ahead on QUEST MEANS BUSINESS, we will continue. If you want to know what's happening in the market, don't look at the screen. Well, maybe look at your computer screen, because Google may provide the answer to life's questions. QUEST MEANS BUSINESS.
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QUEST: Predicting where the markets will move: now it's based on instinct, experience and educated guesses. Researchers say now all you need is Google Data and the right words to search. Think about this: today's Dow Jones is up, what, about -- as you can see on the screen, the Dow is up 120 points. But imagine if you knew, by looking at Google, what might happen in the Dow's or days ahead.
Join me at the superscreen and you will see what I mean. Now this is trading by Google searches. OK, substantially it's over a 7-year period and the red stripes show when lots of people are Googling a particular word, in this case they've gone for the word debt. It's often (inaudible) comes before a market fall, mostly notably here, which as you can see, is just before the 2008 stock market crash.
In that week, the Dow fell 18 percent. So if you had known, for example, blue stripes show when the word debt was lower and generally the market would rise. Red is lots of people looking, blue few people looking. And what they've proven, of course, is the correlation between the word and the market going up and down.
So using this to decide when to buy and sell, we can make a theoretical profit. Put it this way, if you had followed their model and had bought when they -- and sold -- sorry, I had the (inaudible) sold when people were looking for debt, you'd have made a profit of 326 percent.
You have to compare that with just your strategy and my strategy of buying and holding over the same period, bearing in mind the Great Recession a gain of just 16 percent.
Let's go back to the chart here of the word, because it's not just enough to know the matrix. You've got to know which words to look for. Suzy Moat from University College worked on the (inaudible). This is fascinating, isn't it? Is this -- is this the key, do you think?
SUZY MOAT, SOCIAL SCIENTIST, UNIVERSITY COLLEGE LONDON: It's perhaps the key to understanding better how traders make decisions. So this is what set us off on this path. You can see the data from the stock market. That tells us a lot about what the traders did. But it doesn't necessarily tell us how they decided to make these actions.
And obviously, if you were trying to decide to do something, you might look for information. And Google is obviously extremely important for us finding information these days. But and so we drew a link between the two sources.
QUEST: Right. But this is -- we don't know what word to look for.
MOAT: It's true. So this is --
(CROSSTALK)
QUEST: You used words "debt" -- what other words did you look at?
MOAT: We looked at "portfolio;" we looked at "stock market." We looked at a range of 98 search terms. And we report the results for all of these search terms in the paper. And we found there is a large difference between how different terms perform when you plug them into the strategy. But you can explain a significant amount of that difference if you consider how financially related a term is.
QUEST: Right. Now every single viewer watching and is interested in this really has only one question: what word should we be looking for to see the number of searches to tell me about tomorrow, not yesterday?
MOAT: Well, luckily, we have some fantastic collaborators in Boston (inaudible). And they're working on developing a system to help us work this out as we go along. You're right. Just looking at a static set, as we described in the paper, that's not going to cut the mustard for the future. We need to work out which terms are becoming important as we move forward and trade on the basis of those.
QUEST: Because what this does, it has nothing to do with why the traders are making a decision. It just has to do with the fact that they've searched and responded or reacted, isn't it? But the underlying reason for why they search for "debt" or "portfolio" or "bankruptcy" or whatever it is, that's not part of the equation, is it?
MOAT: Well, you're right. So we need to understand the behavior. What's really going on --
(CROSSTALK)
QUEST: -- all we really need to know is the word, because if that's true, you can literally take the word plus the result and cash in the money.
MOAT: That's true. But to find the algorithm and to find the words, my colleagues (inaudible) business school, Gene Stanley (ph) at Boston University, we tried to think about what might make people look for more information.
And we know for example people are much more concerned about losing five pounds than they are about missing out on gaining five pounds, even though that might sound like the same thing. And you know, it costs you time to look for information.
You might look for less information about which (inaudible) should be than where you should go on holiday, for example. And so if the worst thing that somebody could do or the decision of greatest consequence is selling at a lower price than they think it's worth, they might be more prepared to invest more time searching for information.
QUEST: Can you see a day where people -- there will be services that you can buy online that says these are the most searched terms on Google and our historical analysis suggests this could be trouble?
MOAT: That's exactly the kind of system that we're trying to develop as part of a project in the U.S., funded by IATA (ph). So the program manager --
QUEST: Will it happen?
MOAT: Will it happen? That depends on the wonderful talents of our students. But we're making progress. So we're not only trying to anticipate economic movement --
QUEST: Would you put next week's salary on it if somebody said this would work?
MOAT: I think the system requires some more development before we can be really, really sure of whether it's working. We wouldn't -- it's very obvious; we wouldn't tell people at home to go and do exactly what we've described in this paper and expect it to work (inaudible).
(CROSSTALK)
QUEST: (Inaudible). Thank you so much for coming in, very good.
Now look, the question, of course, I'm going to ask you, would you invest your money on the basis of a Google search algorithm that says in these situations this has happened? Because remember, you've got to take the faith, the leap. It's @RichardQuest. The leap of faith, that this has happened before, and therefore it's likely to happening again. Fascinating stuff. But you're @RichardQuest.
A "Currency Conundrum" for you tonight. This Liberty nickel coin sold for more than $3 million at an auction in Chicago. Why is it so special? Is it because it's only one in five in existence, once feared to be missing or it was once wrongly thought to be fake?
Only one in five, feared missing or once thought to be fake? The dollar's headed down, ahead of tomorrow's Fed meeting, now half a percent against the euro. The single currency is on the rise. These are the rates, time for the break.
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QUEST (voice-over): Before the break, I asked about this Liberty nickel, one nickel, and why it's so valuable. It was valuable because, A, it was only one of five in existence; B, feared missing; once thought to be fake. The answer, all three. Ha, ha, got you! It was once thought to have been lost in a car crash in 1952 (ph) after a coin retrieved from the wreckage was declared fake.
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QUEST: A Boeing 787 has taken off in Japan for the first time in months. The test flight by ANA went through without a hitch.
Regulators in Japan are the latest to give the Dreamliner the all- clear to start flying again after overheating batteries forced the airline to take them out of service in January. Ethiopian Airlines, of course, has already started commercial service. But the focus is very much on Japan. ANA has the largest number of Dreamliners in service today.
Our correspondent in Tokyo is Diana Magnay.
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DIANA MAGNAY, CNN CORRESPONDENT (voice-over): A serene test landing for Boeing's Dreamliner 787, the first time it's touched down on Japanese soil since the aircraft model was grounded three months ago because of battery problems.
YUICHI MARUI, ANA 787 CHIEF PILOT: (through translator): I'd be lying if I said I wasn't nervous at all. But I was trying to operate as I always do. It was great weather, (inaudible) looked beautiful and I was very happy this day came.
MAGNAY (voice-over): Boeing still doesn't know what caused the batteries to overheat, one starting a fire in a stationary plane, another forcing the pilot to make an emergency landing after smoke began to fill the cockpit.
But Boeing says a solution has been found; it's time to move on.
RAY CONNER, CEO, BOEING COMMERCIAL AIRPLANES: I speak for all of us, that we would put our families on this airplane any day of the week, at any time.
UNIDENTIFIED MALE: Something happened. The enclosure would contain that, and then there's two (inaudible) off the back of the box.
MAGNAY (voice-over): Engineers say the new modified batteries run at lower temperatures and are encased in steel to contain and isolate any overheating.
MIKE SINNETT, CHIEF PROJECT ENGINEER, 787 PROGRAM, BOEING: We've provided layers of protection so that no matter what the initiating cause was, it will have no effect on the airplane because of the enclosure that we've designed.
MAGNAY (voice-over): Aviation authorities in the U.S., Europe and Japan have given the go-ahead. Now Boeing engineers are installing the new redesigned batteries on all of the affected planes. Three months in the making, Boeing certainly hoping that these modifications make the new battery safe enough. But is safe enough good enough?
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MAGNAY: Boeing certainly gave the impression that it wouldn't be using the lithium ion battery on any future model it might develop.
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MAGNAY (voice-over): Ethiopian Airlines was the first to resume commercial operations on Saturday, just two days after the U.S. federal aviation authority said the planes were fit to fly. Japan's two main carriers, ANA and Japan Airlines, are more cautious. They'll test the planes for now. If all goes according to plan, they'll fly passengers again in June -- Diana Magnay, CNN, Tokyo.
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QUEST: Weather is pretty awful in parts of the world and Tom Sater is at the World Weather Center for us tonight.
TOM SATER, AMS METEOROLOGIST: Welcome back, Richard. We miss you. Nice to have you back.
Hey, let's take a look at --
QUEST: (Inaudible).
SATER: What's that?
QUEST: I said very kind.
SATER: Yes, well, I hope you have your coat; I'm sure you do. It's been a little chilly there and for those traveling around the world, we'll show you a few locations where you can either expect extreme heat or colder temperatures ,such as parts of the U.K.
Notice the patchy cloud cover. That's cold air. A second area of low pressure in Spain is pulling the cold air all the way down into Morocco. But this area of low pressure in Spain, not just providing rainfall which is needed for reservoirs, but how about snow. that's right.
In the province of Vergos (ph), there is snowfall already. In fact, it went well into spring. Temperatures were warming up nicely. Casablanca is at 16. Sevila (ph) is at 12. Barcelona, 15; Torino is at 8. Further north you go, and you get into even cooler air.
Notice Copenhagen is at 8, Oslo is at 6. But Kiev's at 14 and they've been warming up nicely. In fact, we have a stationary front where the records are near high records. In fact, we're almost breaking them in many countries, Bulgaria, Serbia, Romania as well, 28 in Budapest. The average is 19 degrees. Romania 28, 29 degrees. Madrid only getting up to 12.
For the marathoners yesterday, they started the race at 4 degrees. Moisture is making its way up northwards. So from around Marseilles, could have a few days. I doubt it's going to make its way in toward Paris. But London maybe as we get into late tomorrow could have 30-45 minute delays.
Elsewhere, notice Madrid, this is mainly for low clouds, again not significant. But as we go elsewhere, we're going to notice here in Dubai. Notice the thunderstorm activity. That's right. The Arabian Peninsula has seen one wave after another of heavy thunderstorm activity, central areas of Saudi Arabia over to the UAE. In fact, just Qatar's on the northern edge.
But we've had problems in Omai (ph). We've had 30-50 millimeters falling in parts of Yemen.
In Asia, rain showers right now in Shanghai. Hong Kong was looking at the possibility of thunderstorms. Most of it is staying out to this direction. But, again, if you're flying to this part of Asia, you'll keep your seat belt fastened and the tray tables in the upright locked position, because heavy rainfall flooding across Fuji and province over toward areas of Taiwan.
This rain eventually makes its way across Japan as well. Notice Singapore, notice Shanghai and possible delays. Cairns has the possibility of a tropical cyclone developing just to its northeast. Sydney has reached 26 degrees for four days in a row. It's been 45 years since they've had that kind of heat this late into the autumn.
Get ready for the heat in New Delhi, 40 degrees, 33 in Islamabad, Dhaka 36 degrees.
In the U.S., one system after another, again the flood problems up to the north -- in fact, most of you business travelers are not taking the Mississippi River boat. But that's the concern in the U.S. with waters that are rising over the banks, expecting many communities these significant delays will be found mainly on the East Coast from around areas of Miami to Ft. Lauderdale.
So there you have, Richard, around the world in a minute and a half.
QUEST: We thank you for that, a minute and a half. Next time make sure the temperatures go all higher.
SATER: (Inaudible).
QUEST: Tom Sater at the Weather Center.
The record labels hated it. Apple shareholders loved it. And users across the globe are still divided. Either way, iTunes changed music forever.
Join me at the superscreen. iTunes turned 10 years on this weekend. Steve Jobs' vision to reinvent the music industry, he started, of course, getting tough with the record company executives, negotiating.
Jobs won big time. He forced down the price of digital downloads. And the result, of course, was forget the -- what this did. What it did to (inaudible), then of course it killed off the CD. Now CDs are outsold by 7:1. In 2010, Apple crowned Black Eyed Peas the most downloaded song of all.
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QUEST (voice-over): Rather racy stuff for a Monday evening. Apple has sold more than 25 billion songs in 10 years. Now to put this into perspective, 15,000 -- 15,000 are downloaded every minute. And last year's most downloaded song, "Call Me Maybe."
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QUEST (voice-over): Competitors are, of course, after the 63 percent market share. Pandora and Spotify are also, of course, moving forward. Apple's solution is to diversify. The main hub for all iPhone apps, it's all about the cloud and Steve Jobs explained the appeal when he launched movie rentals in 2008.
STEVE JOBS, FOUNDER, APPLE: It's less expensive. It doesn't take up space on our hard drive when we're done. It's a great way to look at movies.
QUEST (voice-over): Happy birthday to iTunes and commiserations.
I was going to say to vinyl and CD, although one thing to remember: even when you download your song, Apple's terms and conditions mean you don't own it. So those fuddy-duddy record players, well, those with the vinyl might still have the last laugh of all.
Now we will have our "Profitable Moment," certainly not as profitable as this. But a "Profitable Moment" nonetheless after the break.
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QUEST: Tonight's "Profitable Moment," we saw something of a Roman rally today in the market. At long last, Italy's got a government to steer it through economic crisis. And it's encouraging news, only, though, if political uncertainty was the biggest problem facing the Eurozone.
Well, it's not of course. You only have to look to Spain, where the trouble is already brewing on the streets. And those numbers, those unemployment numbers, 57 percent youth unemployment. Or in Greece, where thousands, tens of thousands of government workers are set to lose their jobs.
The fundamental problems in Europe are not going away. And in fact, if you take Cyprus into account, they may even about -- be about to get worse, because even within the Rico letters' bold statements on austerity, new governments in Europe have their well -- their work well and truly cut out.
We've yet to hear from arguably the most powerful Italian, Mario Draghi. He'll be in Slovakia for the ECB meeting. If he cuts rates then, well, we're off to the races. All in all, whichever way you look at it, in Europe progress has been made. But it's still going to be a momentous week for the world's economy.
And it's only just begun. Because that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable.
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QUEST (voice-over): The news headlines at the top of the hour: the Syrian prime minister Wael al-Halki is said to be unharmed after a bombing attack on his convoy on Monday. It happened in a part of Damascus that's home to foreign embassies, government buildings and the private residences of some top regime members.
The Afghan president Hamid Karzai has admitted taking payments from the CIA. Mr. Karzai says U.S. intelligence officials had made small payments to the Afghan government for 10 years. And Sunday, "The New York Times" said the CIA had paid tens of millions of dollars in secret payments to maintain influence over the government.
In Bangladesh rescue workers are now using heavy machinery to sift through the wreckage of a collapsed building. That signaled that the end of survivors may be coming to an end. Meanwhile Bangladesh has just announced it will inspect the safety of all garment factories.
And these are the first pictures of Nelson Mandela since his birthday of last year. South African President Jacob Zuma went to visit Mr. Mandela and says the 94-year old former president is in good shape. Mr. Mandela recently spent more than a week in hospital being treated for pneumonia. He was discharged from hospital in early April.
The Danish Queen Beatrix has spent her last full day on the throne after 33 years as the country's monarch. She gave a televised speech a short time ago. The details in the hours ahead.
You're up to date. Those are the news headlines. Now to New York, "AMANPOUR" is live.
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