tv World Business Today CNN May 25, 2011 1:00am-2:00am PDT
irresponsible statement and i think such arrogance should not be shown publicly to the world. >> that startling interview with the former president of pakistan on thursday night. i'm zain verjee at cnn london with breaking news in the united states. there's been significant tornado news. residents have been rushing to their basements again. warnings have gone off after forecasters spotted a severe storm. luckily for them it passed north and crews are still searching if for any crews of sunday's killer
storm. our meteorologist jen delgado joins us from the cnn weather center. jen, how is it looking now? >> we still have watches and warnings across parts of the midwest. of course, we talked about the stormed that happened earlier in the week but according to the national weather service it looks like based on doppler imagery we look like a possible tornado touched down in arkansas. anywhere we're seeing in red we still have a tornado watch in effect. that's for parts of arkansas and missouri. if i take you over to this, we have a report that one person died. it's a rural town, but based on the imagery, the national weather service has told cnn it looks like this area may have suffered widespread damage, the tornado roughly one mile wide is what they're reporting. of course, we have to wait until
tomorrow before the national weather service goes back out and surveys the damage to find out whether or not it was a tornado that touched down. i'll tell you this. it looks like based on imagery there was damage there. that is after reports of a debris ball being reflected on imagery. le as we go through tuesday as well as wednesday morning, we're going to continue with a threat of severe storms. we're going to have a threat for moderate storms as well as damaging winds. we're still dealing with that severe weather threat. zain, we'll send it back over to you. we'll have more updates as wi go throughout the next two hours. >> jen delgado, thanks so much. "world business today" starts now. -- captions by vitac -- www.vitac.com very good afternoon from
hong kong, i'm han drew stevens. >> and good morning from cnn london, i'm nina dos santos. this is "world business today." these are the top stories on wednesday, may 25th. >> he's expected to formally enter into the race as they continue to raise concerns about the imf being led by europeans. the uk looks like it will duck the latest of the ash, but it's still keeping toward the continent. and in our special series on china's aspirations in africa, we look at how the construction boom in uganda comes at a cost. all airports in berlin are set to shut down in less than a half hour as this dense cloud of volcanic ash passes over europe. it drifted on easterly winds
overnight, already causing officials to close a few airports at dawn this morning. we've got live reports from across europe on the volcano's impact in just a few minutes from now. european markets have been up and running for about an hour now, andrew. here's where we stand at the moment. a little more into the hour of the trading sessions, this is really exacerbating the picture we've been seeing throughout the course of the week. european slars are led again by banking stocks heavily affected by the marketing stocks, particularly the ftse and the dax and the mining companies. consistent concerns, we should say, surrounding the health of euro-zone's sovereign ratings and debt notably for greece. let's take a look at how this is impacting the currency markets.
we should mention that the euro actually hit its lowest level in two months of 1.40 versus the dollar. let's look at where it's standi standing. it's still at 1.4035. the currency when it comes to the u.s. dollar, the pound, 1.6156. 82.03 for the yen. andrew. >> not much of a day across asia. there's still concerns about the overriding situation in europe, what's going on with the u.s. economy and what's happening in china as well. that's how markets ended down this day. shanghai down 0.9%. there's more and more talk about the stagflationry picture in
china. certainly that talk is getting more vocal. we sense the third day of set-offs in shanghai on that one. look at australia, nearly down 1 1%. meanwhile in japan, the country has a deficit in the month of april in the wake of the march 11 earthquake and tsunami. the exports were down 12.5% from a year earlier and rising prices did nothing to help imports. it was significant less than many analysts have been predicting, nina. in asia and also in the european continent. and let's look at how things faired on the united states. stocks there fell. this is on the back of america's recovery and european debt, those issues continuing to weigh on sentiment.
the dow jones industrial nasdaq was down 0.20%. the nasdaq down 0.46% and the s&p down 0.08%. this is where we stand in terms of the futures markets at the moment. as you can see, we've got the dow down by almost half of one per centi. similar are the nasdaq. andrew. christine lagarde is expected to announce her plan. if successful, she'll become the first woman to hold the imf job. another has already won the backing of several play ears. she's going to be holding a press conference in paris at 11:45 local time. that's down to two hours from now. >> absolutely.
we'll be bringing our viewers up to date with what's going on. it could be far from straightforward at the moment because not only is it a situation from developing positions but questions regarding legal states. sophie is here with us. tell us about this role. >> reporter: as you know, she's got european backing, so that's not the issue. we're expecting her to declare it. there's a feeling this time around it shouldn't go to a european. having a european would make it
difficult for the imf force to actually impose anything that the europeans didn't want and secondly that for them the balance of economic power has changed in the last few years and this is no longer something that should be astute to be a european job. she also has a legal issue hanging over her in paris which is potentially a problem. it's to do with an arbitration that she set up over damages awarded in a case that reaches back many years, but this is something that could pose some sort of obstacle because right now the french don't want to have a candidate that has any suspicion of any wrongdoing at any point hanging over them. >> let's go into that case. it seems what christine lagarde did was probably quite logical. it stopped endless legal wrangling that had been going on for years and cost the french
taxpayers quite a bit of money. >> reporter: exactly. this is the difficulty. it's a question of procedure. did she follow the procedure correctly and according to the law. the fact is she was the first finance minister that described the dragging of case many years, every year that it went on, had cost the taxpayers money in legal fees. she took an interest in the french taxpayer. she said, let's settle this once and for all and send it to arbitration. the damages awarded were relatively small come baird the amount that was being claimed, and there you have to say, you know, it looks as if she pretty much followed the rule, but the problem is there is this inquiry going on in paris. there's a decision that has to be taken under the french judicial procedure ads to whether or not to investigate her. that decision seems to be due
around june 10, and until that has been -- at least we know she isn't going to be referred to an investigation, the question mark still hangs over her. as you said, it looks as if she -- that's what her advisers certainly say, that she acted in the french's interest. nonetheless, the inquiry is there. >> sophie peder, thanks for joining us. the imf has been run by the europeans since its inception since 1994 but the growing countries are concerned that they run the fund. the so-called british nations that are the fast-growing economies of brazil, russia, china, and india. africa is also voicing their concerns. the imf directors off of those five countries had this to say.
the convention that the selection of the managing director is made in practice on about the basis of nationality undermines the legitimacy of the fund. we are concerned with public statements, that the position of managing director should continue to be occupied by a european. they're called for a, quote, truly comparative base. there are two european candidates who have thrown their hats into the ring. you're looking here at agust agustin carstens. along with him is grigor grigory marchenko. also the european heavyweights and officials. we have these two nominees.
they say expect more to come out of the emerging economies. >> you know what's really interesting, andrew, is i've been speaking to people inside the imf myself, and irrespective of whether they come from a euro zone country or otherwise, there seems to be inside the doors of the imf quite a call for that. we'll have to see that. we have more to tell yog u after the break. more airport closures, more stranded passengers, once again, because of an icelandic volcano. we'll have more. do stay with us here on "world business today." nationwide insurance. talk to me.
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as severe as it was 13 months ago, but try telling that to thousands of air travelers stranded across europe. it's subsiding, it seems, but ash from that eruption which began at the weekend is drifting across northern europe. at least two airports are close and all are set to shut down 45 minutes from all. denmark, southern sweden and norway are also closely watching the movements. this is what the volcanic movement looks like from above. they've canceled some 500 flights from scotland and over northern england. cnn has correspondents right across europe covering this latest volcanic eruption.
fred has more. they will be relieved to wake up this morning to the news that the skies will be largely clear. the ash clouds or what's left of it will be leaving the british airspace. after flights were canceled and airports were closed, we're told the services should be returning to normal. the airports of glasgow and others are expected to open. british airways, easyjet, they hope to be offering regular services as well. so tremendous relief there, particularly given the fact that the heavy concentration of ash did not move to the southeast corner of england. we are told that some of the
british airlines have cancelled flights to other parts of europe that may now be impacted by the ash cloud, in particular flights going germany and denmark. contact your airline. the british office tells us that if the volcano continues to behave as it has been doing or as it is right now, there is a possibility that the ash cloud could return to britain by friday in heavy concentration once again. so watch to see what is happened there on that front. >> that's good to hear. phil black, thanks very much for that. let's see what the picture is like there. let's go to frederick who's on the scene. what's the latest that you're hearing from germany?
>> reporter: there's a lot of annoyed travelers. as you said two airports were closed at 5:00 a.m. and 6:00 a.m. and berlin is poised to close very soon as well. dozens of flights have already been affected. the travelers there not very happy about what's going on. it would be different ifarities like frankfort and munich, which are the largest airports in europe, would be affected. they're saying at this point it does not appear that the ash cloud will affect either of those two major traveling hubs. one of the interesting things, nina, is they have a blanket ceiling level for the ash concentration that is allowed for planes to fly. it's two milligrams of ash per cubic meters of air. once that is exceeded, no planes
are allowed to fly except for, of course, things like search & rescue missions. the good news here for people in germany believe that the ash cloud will have dissipated sometime by the afternoon hours. by then, you'll have a pretty big backlog at berlin's airports as well as the two other airports in jaern, nina. >> thanks very much for joaning us there in berlin and also thanks to phil black in london keeping us up to date. stranded travelsers in europe will take care of them but the airlines are not quite so happy about the current rules. those rules require airlines to provide stranded passengers with food and if necessary your night accommodations if they have to be rebooked. it also requests passengers to ask for compensation if they pay for transportation. last year we were telling you,
more than a week's worth of obstruction. airlines complained. they want to give airlines a break in these extraordinary situations. andrew. >> now, nina, unlike regular dust, volcanic ash is much, much minor. it can affect nozzles and instru anyonation and obstruct joints making things like flaps and tail movement very, very difficult. now, jet propulsion is the key here. it's so hot it can melt the ash that goes through the intake and through the blades there. it builds up in the back of the engine out here where it starts cooling and clogging the engine with what basically has become molten glass. what that means obviously is the engines suffer a drastic drop in performance, which is the key too why there's so many concernser safety. no planes have ever gone down as
a result of volcanic ash in the flight. but some have experienced severe problems in the past including total engine failure. that was over a volcano in indonesia. all four engines went out. the captain got them started but it was critical for a few minutes and the passengers who had to wait for engines to start. >> it goes to show you how difficult the situation could be. it also goes to show you how little we know exactly how much ash in the atmosphere can affect these planes. let's continue the theme. meteorologist jen delgado has been tracking the plumes. she joins us now from the cnn center to tell us where the volcano ash may be heading in the day s ahead. >> good news. as i show you this gravgs we're going to show you the volcanic
ash. notice going essentially hours back. see the pink shading there, kind of the coral color? that's indicating the volcanic ash. it's moving to the north part of to uk. notice here we have a low altitude ash and higher over here toward the northwest. this time yesterday we had a lot of that spreadinging through parts of northern england as well as scotland. a big improvement indeed. as i show you this graphic right here, actually we have more flights in the air, including parts of northern england. this time yesterday we weren't seeing this. the area that we are dealing with reportedly some cancellations and closing that includes here, anywhere in germany, we're going to see some delays because part of that ash plume has been spreading over toward parts of germany. but for parts of the uk, the good news is they're able to catch up on some of the flights yesterday.
on a wider view i want to show you, we do have a advisory in place. this is going to go through the evening in uk time. anywhere in red, notice the uk out of this. this is including the service of 20,000 feet. that's, of course, where planes take off. we're talking 35,000 and 55,000 feet. say if they were going on a transatlantic flight. this is the area of greenland. most of the flights go to the south of greenland. that's good news because they're able to dodge the ash plume. we talk about the low to medium to high concentration of the ash. anywhere in yellow, that's the lower concentration. and, of course, the red and orange shading, that's going to be a problem area of course for iceland. here's the area we're talking. this is going to last later into the day spreading into parts of poland and areas of denmark. make sure you're checking ahead because it's up to the countries flying out of whether or not the
it's been nearly two years since air france crashed off the coast of brazil. an official also tells cnn that the new operation will start on saturday to bring up more bodies from the wreckage at the bottom of the atlantic. all 228 people aboard flight 447 were killed when the airbus crashed en route to paris on june 1st, 2009. >> there's a report that the pilots may have become distracted moments before the air crash. that's a report set from the preliminary findings from the flight recorders. richard quest takes a look at that. >> the report, if true, gives a good account of what's likely to
have taken place of flight 447. the plane flying over 35,000 feet flew into a cloud of storm and then there were a series of failures, notably the speed sensors which cascaded through other computer systems. it's supposed while the pilots were dealing with these, the plane was reduced and fell into a stall. that's the way the rumor and leak goes so far, but it's not confirmed by the airline or the investigating authorities. the investigators will provide a timeline of events on friday, which will clarify matters a bit further. to say this was pilot mistake because the pilots were too busy to notice that the plane was actually falling out of the sky is way too simplistic. it's expected that there'll be a lot of attention on why the speed sensors failed, but also
the manned management and crew management within the cockpit and how they handled the crisis. plane, the safest part of the flight, the cruise, crossing the atlantic, why this plane fell out of the air may no longer be a mystery but solving it could take many more months. richard quest, cnn, london. >> ahead, a week hong kong debut. we'll gauge the reception to the aschenn leg of the ipo when we come back.
welcome back to "world business today." i'm andrew stevens in hong kong. >> and i'm nina dos santos in london. let's see where the european markets are. take a look at that. steep declines everywhere we seem and a number of indices down by in excess of half a percent. particularly for countries like greece, but it's also seemed to have spread in italy and s&p's decision to cut its outlook earlier this week. when it comes to the uk, they've released their first quarter gdp figures and it remains at up above 0.5%. that follows a contraction of half of one percent in the final quarter of
andrew. here in asia, nina, a down day. it's been a trending down week this week. we had a bit of a relapse -- respite, i should say, but certainly not convincing. there you see the markets generally hitting lower. the nikkei down by half of one per sechblt hang seng down. it's had a bad week, shanghai. the story of stagflation, it's a story we've been talking about. the uk economy now also is being directed to china. that's, of course, where you get lower economic growth and higher. stagflation is being seen as a looming issue for the chinese economy. and finally australia on the back of commodity prices down by 1%. now, meanwhile in hong kong, glencore made its debut on the stock exchange one day after it began unrestricted trading on
the london exchange. then it caused a share price that fell following a similar stumble on tuesday. it since paired those losses in hong kong gain hong kong gaining 2.28%. >> you know, an drew, that depends on which reports we want to believe. piece mitts are reporting plunge prices. optimists say the fall has split. there will be a rebound in demand for commodities. in the short term it seems commodities -- seems investors are being cautious. here's a look at glencore's
history. it fell below its initial trading price at about 8.86 per share. now, i spoke with jeremy friesen about this. he along with many other analyst says the same thing. it's a reflection of current market concern over global growth. china's new global forecast as well as japan's return to a recession but he said it's temporary and glencore should see an increased interest, ie, a higher share price. it's the world's largest commodities trader and they can't ignore that basic fact and it's also expected to give others in asia a run for their money. its rivals are now mitsubishi corp. >> you bring up these established plays, how do they compare in terms of profitability? that's ultimately what investors
look at, isn't it? >> yeah. looking at the net profits for 2010, this is how they compare. noble group in hong kong comes up with earnings. gl glencore comes in at 3.76 billion and mitsubishi at 5.42. nobles was over 1% in 2010. glencore at about 2.5%. as for mitsubishi corporation, they came in much higher than these two. they came in at a good 8.9% right there. the japanese firms are much more competitive than switzerland's. to be more attractive, glencore is going to need to push its profit, as for today's shares, andrew, we should allow for a few more weeks for any stocks to start showing trends.
you're watching "world business today." the world bank is trying to bolster the arab awakening. it's expected to provide $6 bill in egypt over the next world to come. $4.5 billion is going to go to egypt and $1.5 billion to economic change. both, it seems, have been short on cash and tourism has, of course, yet to abandon these two
countries, crucially an important part of the economy. besides the world bank egypt has also been speaking to the imf. and qatar has offered to channel up to $10 billion worth of investment to that country. now, switching from north africa to the entire continent now, and this week, that's where we're pointing at cameras, and we're looking at china's companies on the african continent. there may be differences in economic need, but one thing that's growing is the natural resources. as we've noted. much of the business is done in southern africa. on tuesday, we examine why china's business in zimbabwe looks so attractive. today we look at uganda in the center of the continent where there are abundant resources and plenty of room for growth. chinese companies are active in
uganda. even with the projects moving ahead, not everyone is happy. >> reporter: chinese construction companies are literally building uganda, improving the infrastructure with workers brought from china. some complain these workers are taking up jobs traditionally done by locals. >> the chinese consumption, they want to use local people as much as possible, but they also can see there are about the quality of the product. >> reporter: importers, manufacturers, and traders have come to set up shop. street vendors prefer them like
badru musaazi. >> cheap products. >> not being cheap but -- >> reporter: some entrepreneurs are a little less than enthusiastic about the growing influence in uganda. in fact, some accuse the government of failing the influx. this gentleman is suing the state on behalf of local importers. he says some chinese traders are allowed to pay $100,000 to operate in uganda. >> they're pouring into the country, taking over local businesses, retail, wholesale, without actually bringing the money to the country. >> reporter: the government is opposing the lawsuit. it sees china as a country of opportunities, one that it says is helping to add value to its number one export, coffee.
uganda's africa's second largest coffee producer, but over 90% of it is exported as beans with very little being processed or consumed here. now coffee grown in uganda has been roasted, packaged and sold in beijing in a joint venture between two governments. it's helped to make coffee more popular in a nation of tea drinkers. >> coffee drinking in china is very low. i think it is a huge opportunity because it's where growth can be. >> reporter: he says the project has boosted coffee exports to china from 1,000 metric tons three years ago to 2,000 last year. this has done little to help with the lopsided trade between the two countries. exports have increased by a mere $6.5 million while china's
imports grew nearly $180 million. for people like him, it's ultimately about what makes business sense. >> and we'll have more on china's influence in africa on thursday. we'll go to south africa where parents are looking to futures shaped by china. that includes teaching their children mandarin. that's this time tomorrow on "world business today." now we're going to be right back with "the boss." stay with us.
boston brewery is going back in business with an old friend. >> reporter: previously on "the boss," recognition and reward. hindi, engaging the star. >> you've got to get other people excited about what you're doing. >> reporter: and in china, michael wu learns the trick of raising prices. >> we're going do this very gradually so it won't be as noticeable that we're raising prices. >> reporter: nine months ago michael wu was a man with a mission. >> this year is a make know kiss to enter china. we see huge potential all over china. >> reporter: today he's older and wiser. he's found that china is challenging, and the reality is proving expensive.
>> they are hiring people. it's very difficult now. we're having a huge turnover in my staff just because it's very active and very easy for them to get jobs elsewhere. >> reporter: there are more than 90 bakeries in this province alone being fed by china's turbo-charged economy, so michael is finding it difficult to retain staff, than is turning into a major problem. >> when we moved our factory to schenn zheng which we did recently, it's difficult to hire factory workers. these are some of the everyday problems we're facing. >> reporter: and his problems don't end here. the sheer size of china makes just delivering the products a nightmare. that's alone selling them. >> in hong kong, i don't have to worry about logistics because everything's so smar. here because everything is spread out so far, it's a big
cost and a big concern. >> reporter: the going may be tough, but michael is battling on with his plans to open at least 40 stores this year. driving the expansion, profit. as the chairman, michael's all too aware that china's spending power makes its all worthwhile. >> the actual selling price is actually more expensive than hong kong. a few years ago, we were about 25% lower than hong kong. >> one country, two systems. the political formulating of hong kong in the mainland is reflected in the business's climate between the two entities as the boz has discovered. >> the future is very good and there'll be a lot of impact ahead with a lot of challenges but we're going to get there one
day. >> reporter: as they kick into high gear at the brooklyn brewery, steve hindy is visiting the venture that he invested in. steve is in the new york distilling company, looking for the man heading up this project. >> how are you doing? is tom around? >> reporter: he's here to meet tom potter, his former business partner at the brewery. >> welcome to the distillery. >> reporter: before they became business partners, they were friends, neighbors, in fact, who enjoyed home brewing at the weekend. >> we were watching the mets on your little tv in the backyard, and i was trying to convince you that we should quit our jobs and start a brewery. >> reporter: tom was skept kl. he knew that starting a brewery
was a tough business to succeed in, and starting out with a friend, even more so. >> i think the odds that it would work are pretty small. most of my friends i could never be in business with. >> reporter: over time steesh won him over with figures showing the explosive growth of micr microbrewery. >> it was pretty impressive. it went from a stupid idea to, oh, maybe there's something here. >> reporter: they've made it work for 18 years turning the partnership into a multi-million-dollar business. on several occasions their friendship took a hit and they had no choice but to redefine it through a partnership agreement. >> there were definitely times it was hard, the relationship was rocky. you had to step back, take a break, and say, you know, we've got to work this out. i think it did help we had a very similar vision of where wre
wanted the business to go. we were almost always in sync on that. >> we were very determined. we were going to make it work, even when it was important. >> that was about half the time. >> it was, yeah. >> reporter: in 2004 they sold their distribution business and tom left brooklyn brewery. since then steve has built on their success and his own experience. >> for me, the biggest hurdle was going from being an entrepreneur where you're doing everything yourself, and if it's got to be done, you go do it, and becoming a manager where you sit in your office talking to people and trying to get them to do what has to be done. that's tough. >> reporter: next week on "the boss." as michael wu's expansion plans take shape, richard quest goes
for a visit with "the boss." >> and if you have any comments on any of these stories you see on the show, including "the boss," of course, you can get in touch with the whole team on your facebook page. let us know your thoughts. well, that's it for this edition of "world business today." i'm nina dos santos in london. >> and i'm andrew stevens in hong kong. we'll be back. "world one" is next, though, with more on the volcanic ash cloud affecting german airspace.
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