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First Move with Julia Chatterley
Joe Biden And Kamala Harris Together For The First Time Since It Was Announced She Is To Be His Pick For Vice President Nominee; The United Kingdom Is In The Deepest Recession Of Any Of The Major Developed Economies; Signs Of Recovery In The Travel Industry. Aired 9-10a ET
Aired August 12, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:10]
RICHARD QUEST, CNN BUSINESS ANCHOR: Good morning. Live from New York. I'm Richard Quest, in for Julia Chatterley today.
Midweek, and here is your need to no.
Biden's choice. Today, we will see Joe Biden and Kamala Harris for the first time since it was announced she is to be his pick for Vice President
nominee.
The U.K. slump. The United Kingdom is in the deepest recession of any of the major developed economies.
And yet there are signs of recovery, not in the U.K., but in the travel industry. On this program you'll hear the CEOs of booking.com and AirAsia.
Now, it's FIRST MOVE. Let's make a move.
A very warm Wednesday welcome to First Move. I'm Richard Quest. I'm in for Julia Chatterley, who is off for the week.
Now, let's take a look at the markets, or at least what we're expecting to happen and the surrounding circumstances in which we look ahead to the New
York open.
The futures are pointing to a higher open after Tuesday's late session pullback. It was quite dramatic the way the market did turn negative
yesterday. The S&P is still close to a record high. Didn't make it yesterday. But that's the way the futures are. It won't make it at the
open, but it might as the day goes on.
Tech stocks will rise or set to rise for the first time in four sessions and stimulus, the talk in Washington is still going nowhere. That could
lead to volatility.
U.S. consumer price is up six-tenths of a percent in July, a bit hotter than expected. Higher gas prices is the reason. The summer driving season,
which probably is more important than in previous years, because of course the staycationers and those people are on domestic holidays.
Tesla will rise more than five percent after announcing a five-for-one stock split. Now, in theory, a stock split is neutral, but it tends to push
the price up. You'll see it in the price at $1,456.00. It will drop as a five to one split accordingly.
The biotech firm, Moderna is also rallying premarket. The U.S. will buy a hundred million doses of its COVID-19 vaccine. It is worth $1.5 billion.
And in Europe, stocks are higher. Gains from the FTSE despite historically weak GDP data which we will talk about with Isa Soares in a moment.
Asia, mostly higher. Chinese stocks down second day. Amongst Asia's companies, Cathay Pacific reported a $1.3 billion loss in the first half.
Its shares rose 12 percent. That's because flights through Hong Kong and Mainland China could begin again. Good, I say. That would of course be a
huge boost to Cathay Pacific.
Joe Biden and Kamala Harris will appear today in Delaware, which is Joe Biden's home state. The former Vice President picked the California Senator
as his running mate, she is the first woman of color on any major party's presidential ticket. This was President Trump's reaction.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I was a little surprised that he picked her. I've been watching her for a long time and I was a
little surprised. She was extraordinarily nasty to Kavanaugh and I won't forget that soon.
So she did very poorly in the primaries and now she is chosen, so let's see how that all works out.
(END VIDEO CLIP)
QUEST: Joe Johns is at the White House. Now, hang on a second, Joe. President Trump says he was a little surprised, but didn't the President
also say he thought she would be the one Biden would pick? Which is it?
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Anybody's guess and I have to tell you, quite frankly, the early hours of the response to Kamala
Harris have been all over the place when you think about it.
The President tweeting this morning, just a little while ago that Kamala Harris in the primaries, when she was running for President, started
strong, finished weak, and he called her the kind of opponent anyone dreams of.
However, behind the scenes, people in the campaign say they are concerned that she'll be a very formidable opponent. That she is the type of opponent
who certainly will fight and fight hard, including in the debates against the sitting Vice President.
So the President as you saw in the sound bite, calling her essentially a nasty woman, which is the type of moniker he has used before for other
women in politics who have opposed him, calling her a terrible person and so on.
[09:05:30]
JOHNS: But the campaign had taken a completely different tactic. They put together an ad essentially calling Kamala Harris a phony, because she had
been critical of Joe Biden during debates in the primaries.
Just a little bit all over the place. They're going to have to figure out what their attack is going to be, and one thing you can count on, very
likely they're going to try to paint this entire ticket as radical, very far to the left, and unsuitable for American politics at this stage.
The problem with that is that Kamala Harris, while she does have a liberal voting record in the United States Senate, she's also a former prosecutor,
a former Attorney General for the State of California, which moves her much more center left as opposed to just left. Back to you.
QUEST: Noticeable that the President didn't particularly -- and knows it all -- praised the fact that it was the first time it was a woman of color
on the ticket. In fact, the Republicans ignoring that, essentially going into the election with two white middle age -- well, elderly, I would say,
one on the wrong side of 70 men.
JOHNS: Right. She will certainly represent the new side of the Democratic Party, and especially if Joe Biden gets elected, she would be the
presumptive next person to run for President, an African-American woman in her 50s, as opposed to the men who are certainly much older.
But I think it's even more broader than that, if you will, just the fact that while she is African-American, she also has parents both Indian, as
well as Jamaican, which gives her a real international flavor as a candidate, and is highly spoken of and thought of by former President
Obama.
And if you look very carefully at this ticket, it does appear that Biden is trying to rebuild that Obama coalition that brought him to eight years in
the White House -- Richard.
QUEST: Joe Johns at the White House. Joe, thank you. We'll hear more on this story. We'll be in Delaware where that meeting -- the first outing, if
you like, for the Vice President and Kamala Harris, and it will be an interesting one because they'll then do a virtual fundraising.
None of the big events. None of the big rallies. This would have been a day for a big rally pre-COVID, but that's not going to happen.
Turning to the economic news now. The United Kingdom has suffered one of the worst or is suffering one of the worst recessions of all major
economies. Down 20 percent GDP in the second quarter of the year. Isa Soares is with me.
Isa, the U.K. had been down about two percent to three percent in Q1. Q2, we shouldn't be surprised, but still, looking into the numbers, what does
it tell you?
ISA SOARES, CNN CORRESPONDENT: Indeed, we shouldn't be surprised, Richard. But when I looked at the numbers from the ONS this morning in black and
white, it's still a bitter pill to swallow, especially when you look at how deep that contraction was, Richard of 20 percent.
The U.K. now joining the likes of Euro zone and the United States in being in recession. But if we can have a look at what exactly those numbers mean,
Richard, it means that in basically two quarters really, in the last two quarters the U.K. economy erased 17 percent of economic growth. That is
gone, just to put it into perspective.
But why has the U.K., Richard, suffered more because of this lockdown recession than other G-7 countries. Take a look at this graphic that our
producer is pulling up for you to see.
In comparison, the U.K. economy in the second quarter suffered the biggest declines. When I spoke to the economists this morning, several of them this
morning, they said to me for two reasons, because of the timing of the lockdown, Richard, and also the duration of the lockdown.
The U.K. went into lockdown later than the likes of Italy and came out later, hence why we have been most affected.
At the same time, it's also because of the way the emphasis of the U.K. economy, and that is more on retail, on services. So, if we look exactly at
the sectors and those most impacted, you can get a better idea how dependent they are on that lockdown being lifted.
I am going to read them through. Services sector, Richard, down 19.9 percent, almost 20 percent contraction; production, 16.9 percent, Richard;
and construction 35 percent, and that gives you an idea of the sectors that are most exposed to that lockdown that we had here in the U.K. in the
second quarter -- Richard.
[09:10:19]
QUEST: Isa Soares with those numbers from the U.K., thank you, Isa. We'll stay in the United Kingdom.
Emergency crews are on the scene of a train derailment that took place this morning in Scotland.
Breaking news, the First Minister, Nicola Sturgeon -- the First Minister of Scotland, Nicola Sturgeon is calling it an extremely serious incident and
says there are early reports of serious injuries.
Max Foster is in Glasgow following the events. Max, can you tell us more?
MAX FOSTER, CNN CORRESPONDENT: Yes, pretty frustrating, I think for families who may be concerned that there was someone on the train that they
knew.
We're getting very, very little information. It's quite a difficult area to access. It's quite near Aberdeen, but it is out in a rural area and there's
some question about which train this was and how long it took for the Emergency Services to be notified about this.
They were notified about 9:40 in the morning, but we think the train left Aberdeen just after 6:00 in the morning. So, we're trying to get those
details. But, obviously, the priority right now is for the Emergency Services.
They've had to bring a helicopter in to reach the train. What we do know is that there were storms in Aberdeenshire in that area last night. Then there
was flooding. And then Network Rail which looks after the lines tweeted a video this morning showing how the line in the area had been flooded and
land slipped. It actually closed the line.
So people are linking the two; but without official confirmation, it's very difficult to tell. Nicola Sturgeon, the First Minister of Scotland
declaring a major incident. Also, Boris Johnson down in London being briefed on this, so they're clearly concerned, awaiting any formal updates
from the health authorities or from Network Rail.
But for the moment, information is very difficult to get out. We think there are some issues with phone signals there as well. They are obviously
working very hard on the instant, and these images are the billowing smoke, not boding well for many people watching the TV images coming out from
that.
QUEST: All right, Max. I know, it is a very difficult and remote part of Scotland to get to. So Max, come back when there is more details, please.
Come back and we'll take you immediately.
Now, some other news making headlines around the world. President Trump has announced a $1.5 billion deal with the U.S. biotech giant, Moderna to
manufacture and deliver a hundred million doses of a vaccine. Moderna is in Phase 3 clinical trials for its vaccine.
A top health expert is skeptical of Russia's claim that it's developed the world's first safe and effective vaccine. Moscow hasn't released any data.
Here is what Dr. Fauci told "National Geographic."
(BEGIN VIDEO CLIP)
DR. ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: Having a vaccine, Deborah and proving that a vaccine is safe and
effective are two different things. I hope that the Russians have actually definitively proven that the vaccine is safe and effective. I seriously
doubt that they've done that.
(END VIDEO CLIP)
QUEST: The billionaire media executive, Sumner Redstone has died at the age of 97. He once controlled a sprawling media empire that included CBS,
Viacom and Paramount Pictures.
Brian Stelter now reports on Redstone's long and sometimes controversial career.
(BEGIN VIDEOTAPE)
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT (voice over): A media Titan whose turbulent personal life drew almost as many headlines as his deal
making. Sumner Redstone built a multibillion dollar business over several decades.
A sprawling empire that includes Viacom and CBS, with marquee brands like MTV, Comedy Central, Showtime and Nickelodeon. Redstone foresaw the primary
of TV programming, hit movies or in a word "content."
(BEGIN VIDEO CLIP)
SUMNER REDSTONE, BILLIONAIRE MEDIA EXECUTIVE: I coined the phrase, "Content is king." Now, the phrase is ubiquitous, echoed wherever you turn.
(END VIDEO CLIP)
STELTER (voice over): Born in Boston in 1923, Redstone went to Harvard Law and worked as an Army code breaker during World War II.
In 1954, he left a lucrative law career to work for his dad's movie theatre chain.
(BEGIN VIDEO CLIP)
REDSTONE: Money, and I mean it sincerely, has never motivated me. The passion to win has motivated me.
(END VIDEO CLIP)
STELTER (voice over): He built a handful of drive-ins into a conglomerate, then used his movie theatre fortune to buy Viacom, Paramount and CBS.
But Redstone's life was almost cut short in 1979. He survived a Boston Hotel fire by hanging off the window ledge, suffering third-degree burns
over 40 percent of his body.
His personal life was stormy, too, marked by legal battles with his family.
When he was 92, a former girlfriend challenged his mental competency after he cut her from his will. A judge ultimately ruled in Redstone's favor.
Now, she controls the media empire that Redstone leaves behind.
(END VIDEOTAPE)
[09:15:27]
QUEST: Brian Stelter reporting. We have a lot more. It's FIRST MOVE in the middle of the week. The markets of course open in about 15 minutes from
now.
A surge in mobile gaming is driving Tencent's best quarter in two years as it grapples with a potential U.S. ban.
And restaurants, hotels and airlines have all been hit hard by the pandemic. Booking Holdings, exposed to all three, the Chief Executive is
with me shortly.
(COMMERCIAL BREAK)
QUEST: A very good day to you and a warm welcome to FIRST MOVE.
The market opens in 12 minutes or so, give or take, and it is set to rally, it is what we're expecting after a late pullback. There was quite a
dramatic pullback, actually, and it was all to do with stimulus and worries on what Mitch McConnell had said.
But the S&P could hit fresh records. Bank shares are higher. Volatile day for gold. It is lower, down five percent on Tuesday. The worst day in seven
years. Now, this has all to do with the stronger dollar, rising yields.
Remember, the gold is always affected by interest rates and the dollar.
And talking of all of this, oil is rallying. U.S. inventories fell more than expected last week, trading near five months high.
Tencent has beaten expectations in the second quarter. The company is showing the fastest quarterly growth in two years. Online game revenues
jumping some 40 percent year-on-year.
CNN's Selina Wang is with me from Hong Kong. Selina, good to have you with us. A warm welcome.
So, these earnings, Tencent we watch closely. These earnings, what do we make of them?
[09:20:10]
SELINA WANG, CNN CORRESPONDENT: Well, Richard, they continue to defy this broader economic slowdown in China, with its profits reporting some $4.8
billion in the second quarter.
As you mentioned, the online gaming division, that is its cash cow, its core business, and they're really benefiting from these COVID-related
lockdowns that are leading to more people spending more time at home playing more of their smartphone games.
But of course, Richard, the big question is this Trump executive ban that seeks to ban transactions between the U.S. and WeChat, its super app. This
could have far-reaching implications that would be cutting off a key mode of communication between the U.S. and China and could potentially dent its
advertising business as well, given that U.S. companies like Starbucks rely on WeChat to reach the Chinese consumer.
QUEST: Now, Selina, ironically, I'm actually using something -- I am using WeTalk, which is partly owned by Tencent to actually hear what you're
saying. It's a good cheap internet IP way of communicating.
But when we talk about TikTok, WeTalk, WeChat and all of these things, there are security issues. Should we be concerned -- Selina.
WANG: Richard, absolutely. I mean on that point, WeChat in China is absolutely critical for day-to-day life. When it comes to these security
implications for Americans, the security experts I spoke to say they are largely hypothetical risks.
And really this executive order is based off of this broader campaign from the Trump administration to decouple U.S. technology from China, especially
as the Chinese government under Xi Jinping is increasingly seen as an existential threat.
But take a listen here to hear more about what these experts had to say about these potential risks.
(BEGIN VIDEOTAPE)
WANG (voice over): Dancing ferrets, lip-synching kids. Teenagers playing pranks on each other. That's the stuff of TikTok. It's the first Chinese-
owned app to become a global social media sensation.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: We may be banning TikTok.
(END VIDEO CLIP)
WANG (voice over): Yet on Friday, President Trump issued executive orders that would ban TikTok and messaging app, WeChat from operating in the U.S.
in 45 days.
TikTok said in a statement it was shocked and willing to sell its U.S. business to an American company.
The Trump administration says the apps are a threat to national security and the personal data of American citizens and are also a tool for the
Chinese Communist Party.
But do those claims stack up?
The data TikTok collects is similar to what companies like Facebook and Google do. It knows your location, internet address and browsing history.
It tracks what videos you like, share and watch. That all helps power the TikTok algorithm that makes the app so powerfully addictive.
(BEGIN VIDEO CLIP)
WANG (on camera): So James, I have TikTok pulled up on my phone. You can see lots of fun dancing videos. How is any of the information captured in
that app relevant to Chinese Intelligence? What makes TikTok a national security threat?
JAMES LEWIS, SENIOR VP, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: Probably no information captured by TikTok that's relevant to Chinese
Intelligence.
The risk comes from ByteDance, TikTok's Chinese owner and the fact that it is subject to the whims of the Chinese government, and so it's ByteDance
that could use TikTok as a vehicle for espionage if they chose to do so.
(END VIDEO CLIP)
WANG (voice over): Lewis said TikTok could theoretically be used as a vehicle to get access to people's other private information on their
phones.
TikTok says it has never shared user data with the Chinese government nor censored content at its request.
In the U.S., WeChat has not had nearly the same success that TikTok has had, but it's a key way for people abroad to connect with friends, family
and business contacts in China, where it is indispensable for daily life.
Imagine Facebook, LinkedIn, Uber, Instagram, PayPal and several more apps all rolled into one. Experts say that WeChat is surveilled and censored.
(BEGIN VIDEO CLIP)
SAMM SACKS, CHINA DIGITAL ECONOMY FELLOW, NEW AMERICA: From a national security standpoint, does WeChat pose a threat? I would say yes. Now, does
that mean that it should be banned on everyone's devices? That's a separate question.
Federal employees, people with security clearances, military personnel, should not be downloading WeChat on their devices.
(END VIDEO CLIP)
WANG (voice over): China's Ministry of Foreign affairs on Friday said it firmly opposes the executive orders targeting WeChat and TikTok.
It claims the U.S. is using national security as an excuse to oppress non- American businesses.
But as the Sino-U.S. relations spiral downwards, banning Chinese apps may be the tip of the iceberg. The move indicates the Trump administration is
broadening its attempt to restrict Chinese tech companies from operating in the U.S. even if it appears to be a little more than a platform to share
viral dancing videos.
(END VIDEOTAPE)
WANG: Richard, these security experts also told me that outright banning these apps doesn't necessarily solve this broader issue of protecting
Americans' data privacy.
They say what the Trump administration should be focusing on more is creating broader standards and legislation that will hold all apps
accountable, because the internet does not respect geopolitical boundaries, even if you purge Chinese tech from the U.S., security risks will always
exist.
[09:25:27]
QUEST: The problem is, Selina, or isn't it, that Huawei, we're told, is a risk, TikTok is a risk, WeChat is a risk. Anything that is -- and yet all
these companies protest vehemently to the nth degree that they are not handing over data. It's almost impossible for investors and for ordinary
users to know what the truth is.
WANG: Absolutely, and it is impossible for these Chinese companies to eliminate these risks because they're being asked to disprove a
hypothetical. So, it's a very challenging situation on all sides.
QUEST: That's exactly it. How to disprove the hypothetical or disprove the negative. Good to have you. Selina, a warm welcome to the world of CNN and
nice to have you with us here on FIRST MOVE this morning.
WANG: Thank you.
QUEST: Now, we have a lot more to bring you. The market opens very shortly. We are expecting -- I wouldn't say a strong, but about one percent
on the Dow.
Remember, it fell yesterday late in the day on stimulus worries. But that seems to have all gone by the by for the time being. We will have the
opening bell live for you here on CNN's FIRST MOVE and it comes after this very short break. In a moment.
(COMMERCIAL BREAK)
[09:30:00]
QUEST: Opening bell on Wall Street. We are now off to the races. Trading is under way. We are expecting a sharply higher open for all the major
indices and you see that straight away, except for the NASDAQ. That's turned turtle.
Welcome back to FIRST MOVE. There it is, the NASDAQ is now up nearly one percent like all the others are, too. A bit of a blip there at the open.
Gains for stocks, the S&P is close to its record high, 20-odd points from that. NASDAQ giving up -- opening higher after several days of losses.
Treasury yields, let's look at Treasury yields, rising for the fourth straight day. Yields go up, the price goes down, and that's because of
hopes for stronger economic growth on the back of stimulus.
And one stock to note at this early stage, Brooks Brothers. The tradition will continue, the oldest U.S. men's clothing store has been sold to a U.S.
investment group. It is $325 million and its pending approval by a Bankruptcy Court, of course, Brooks Brothers in Chapter 11, and they will
be allowed to keep a majority of the North American stores open.
So, to U.S. politics, which is riveting and has been moved forward greatly with the announcement that Joe Biden and Kamala Harris will appear today in
their first joint appearance since Harris was announced as the vice presidential nominee for Biden.
They'll deliver remarks together in Delaware, a day after Biden picked the California Senator. Arlette Saenz has the details.
(BEGIN VIDEOTAPE)
ARLETTE SAENZ, CNN POLITICAL REPORTER (voice over): With Election Day 83 days away, the Democratic ticket is now set with a historic pairing.
Joe Biden selecting California Senator Kamala Harris as his running mate, telling her the news during a Zoom call from his Delaware home.
The two faced off last year in the Democratic primary, including this heated debate moment over school busing.
(BEGIN VIDEO CLIP)
SEN. KAMALA HARRIS (D-CA), PRESUMPTIVE DEMOCRATIC VICE PRESIDENTIAL NOMINEE: And she was bused to school every day, and that little girl was
me.
(END VIDEO CLIP)
SAENZ (voice over): But Biden insists he doesn't hold grudges and chose a former rival who has done battle on the campaign trail.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESUMPTIVE PRESIDENTIAL NOMINEE: Senator Harris has the capacity to be anything she wants to be. I mean it sincerely. She's solid.
She is -- she can be a President someday herself.
HARRIS: And Joe Biden is on the ballot in 2020.
(END VIDEO CLIP)
SAENZ (voice over): Campaigning together in Detroit this spring, Biden portrayed himself as a link to the next generation, including Harris.
(BEGIN VIDEO CLIP)
BIDEN: I view myself as a bridge, not as anything else. There's an entire generation of leaders you saw stand behind me. They are the future of this
country.
(END VIDEO CLIP)
SAENZ (voice over): Harris's early career included a stint as District Attorney in San Francisco before serving as California's Attorney General.
In 2016, she was elected to the U.S. Senate, where she rose in prominence for her grilling of President Trump's nominees.
(BEGIN VIDEO CLIP)
HARRIS: Can you think of any laws that give the government the power to make decisions about the male body?
(END VIDEO CLIP)
SAENZ (voice over): The 55-year-old Democrat is one of only three women to appear in the VP slot for a major party ticket, following Democrat
Geraldine Ferraro in 1984 and Republican Sarah Palin in 2008.
But Harris, the daughter of Jamaican and Indian immigrants, is making history of her own, becoming the first woman of color as a vice
presidential nominee.
On the campaign trail, parents often brought their young daughters to see a biracial woman vying for the nation's top job.
(BEGIN VIDEO CLIP)
HARRIS: When I see those little girls in particular, I mean, I see myself, right? And I see the children of my family. And I see the children of our
country.
(END VIDEO CLIP)
SAENZ: Harris also shared a special bond with Biden's late son, Beau, the two becoming close when they each served as Attorneys General in their home
states.
(END VIDEO CLIP)
HARRIS: I got to know Joe through Beau. Because you've never seen -- it's a rare thing to see such a special relationship between a father and his
son. I know Joe, and that's why I'm supporting him.
(END VIDEO CLIP)
SAENZ (voice over): Biden telling supporters Tuesday, "There is no one's opinion I valued more than Beau's, and I'm proud to have Kamala standing
with me on this campaign."
(END VIDEOTAPE)
[09:35:07]
QUEST: Arlette is with me in Wilmington, in Delaware. So bearing in mind all the social distancing restrictions, what do we expect to happen today
and when?
SAENZ: Well, Joe Biden and Kamala Harris will appear here in Wilmington, Delaware for their first appearance as the Democratic ticket. They will
deliver remarks a little bit later today.
But one thing we're going to watch is, what is this like with social distancing in the age of coronavirus? Biden typically walks into his events
wearing a mask and then takes it off when he reaches the podium.
But this is certainly a different format than previous vice presidential rollouts which typically have had larger rallies to accompany them.
Now, after that event, Biden and Harris will also be holding a virtual grassroots fundraiser with their supporters as they are trying to drum up
some excitement heading into November's election.
QUEST: And we'll also be watching the chemistry between the two of them. Obviously, Biden has put to rest any resentments about the campaign, the
primaries.
But the dynamic between them sort of will be crucial, bearing in mind that she could be the vice presidential nominee who comes closest to actually
having to become President.
SAENZ: Yes, that's right. And that's something that we're going to kind of see play out over these next few days and heading into the convention, is
what is that relationship like between the two of them?
You know, we know that Kamala Harris has close with Biden's son, Beau. Biden himself encountered Harries a few times on the campaign trail.
There's even a photo of one time when Kamala Harris was driving down the road and saw Joe Biden and jumped out of her car to get a picture with him.
But that is something that we are certainly going to be keeping an eye on, and also Biden is trying to replicate that relationship that he had with
President Obama, which when they first became running mates, they weren't especially close, but that relationship clearly built up over the eight
years and that's something that Biden sees some long-term potential with, with Kamala Harris, hoping that he can get to that kind of governing
relationship and personal relationship with his VP pick.
QUEST: Fascinating stuff. Arlette, you'll be there all day reporting for us from Wilmington. We are grateful. Thank you. Arlette joining us from
Wilmington, Delaware.
SAENZ: Thank you.
QUEST: Of course, it goes without saying, but I'll say it anyway, that CNN will of course have live coverage of those remarks made by both of them.
You'll see it all here on CNN.
Now, in a moment, the pandemic future for travel, we've got the two CEOs, the CEO of Air Asia, and of Bookings. After the break.
(COMMERCIAL BREAK)
[09:40:53]
QUEST: The hospitality and the travel industry is showing some sort of resurgence, for instance, the U.S. has now lifted its global do not travel
advisory, although it's still in effect for some parts that are badly affected by COVID.
Meanwhile, companies like bookings.com are now starting to see some resurgence, too. The online travel giant owns brands. Booking Holdings
include Priceline, Kayak, OpenTable, booking.com, and it recently announced up to 25 percent of its workforce will be cut, roughly 4,000 employees.
The CEO and President is Glenn Fogel. He joins me now. Glenn, we spoke a few months ago just as the summer was getting under way and you said then
that things were in trouble, but that you remained hopeful that there would be resurgence.
Are you seeing travelers making -- deciding to make the decision to book holidays and flights?
GLENN FOGEL, CEO AND PRESIDENT, BOOKING HOLDINGS: Well, thank you for having me, and it did happen as we had hoped in terms of people did begin
to travel more and we saw it throughout as we went from the spring into the summer. We saw people get more confident that they could travel, albeit
very close to home, and from the very, very bad numbers in April, we've seen numbers go up-and-up steadily.
Though I will, say recently we have been concerned about some of the flare- ups around the world with the virus and there's an incredible correlation.
When there's news about flare-ups and infections, people get more nervous and they don't book as much. It's just so easy to see in our numbers.
QUEST: So the real issue becomes now -- I mean, we're almost mid-August. As we go to September and then October when leisure travel tends to drop
off before you get into the winter, I'm talking about the northern hemisphere now, of course, then you're going to see things go into reverse,
aren't you?
FOGEL: Well, that is the typical pattern, that our biggest season is the northern hemisphere summer season. It's always the biggest for travel. That
being said, nobody knows what's going to happen in the fall this year, because perhaps people who did not take a vacation or holiday in the
summer, maybe they will decide they will do it in the fall if they feel better about the safety in terms of travel and the virus, that could
happen.
The flip side is the fall usually has a resurgence in business travel and I do not expect that to be happening. Many, many companies are being very
cautious about having people go out and do business travel, one. Two, a lot of offices are closed. So that's going to be a little different than it was
in the past.
We're much more leisure, so not as important for us.
QUEST: Has the company, Bookings Holdings, across the brands, have you now seen your staffing levels adjust, which is a polite way of saying job
losses, but have you seen it adjust to where you don't believe you'll have to make further job losses?
FOGEL: Well, let's be blunt about this. It's a tragic situation, not only for all of my colleagues and the people that we are having to lay off, but
the entire industry. A third of a billion jobs around the world are related to tourism and hospitality. It's one of the biggest areas in the world for
people to get a job, and this virus has just decimated the jobs in the industry.
In terms of what's going to happen in the future, nobody really knows because nobody really knows what's going to happen with this virus. If we
get a vaccine, if it is -- if we are able to get some sort of -- that it's okay to travel and safer because there is a vaccine, then travel will come
back, then employment can come back.
The flip side is that we just keep going where we are, then I think we're going to be in trouble for a while, which is why I continue to ask for
governments around the world to put programs together that will help the industry recover.
[09:45:06]
QUEST: There's been a lot of talk and not much action directed towards the industry in most cases, and I'm wondering, where do you see the ability to
come together? Whose responsibility is it? I mean, of all the agencies and the W.T.O. and the W.T.T.C., the I.A.T.A's of this world, what more would
you like to see them all do?
FOGEL: Well, we are seeing some governments are doing it. So, for example, in Europe, Italy put together a program, it's a tax credit. It's a way for
people to be on travel and save money on it using government funds.
Japan has a program going forward that we're going to be working with. Thailand has a program. There are lots and lots of different governments
around the world that are doing direct types of programs that helps people get traveling again.
Now, the biggest countries like the United States right now, as you know, the aid package that's being debated in the U.S. Congress right now has got
a lot of different elements in it, including some support potentially for airlines, which is helpful, because you need an airline up and running to
be able to travel far distances, so we need that.
But I'm really looking forward down the road, when it is safe to travel again, which we all hope will happen sooner rather than later, when that
happens, a tax credit or some type of subsidy to travel, that would be wonderful.
QUEST: Good to see you, sir. I much appreciate it. Glenn Fogel from bookings.com. Glenn talking there about what's happening from the Bookings
Holdings side of it.
Now, the CEO of AirAsia, Tony Fernandes, whose airline has been in such difficulties, both AirAsia and AirAsia X now says he sees signs of recovery
and it's not all gloom.
Indeed, Tony Fernandes is even talking of a V-shaped recovery.
(BEGIN VIDEOTAPE)
TONY FERNANDES, CEO, AIRASIA: Well, I'm still smiling, still standing. Our planes are flying in all our countries. We are about seven to ten load
factor, so you know, it could be worse; of course, it could be a lot better. But there's light at the end of the tunnel.
QUEST: The future, in a sense, you were quoted a few weeks ago saying you can see a path to profitability. Do you still see that?
FERNANDES: Absolutely. I think the only question mark is how quick international borders open -- are going to open up.
So first one is Singapore, which I estimate to be sometime this month, and that's a big step forward for us. And then I think you'll be able to see
other South East Asian countries opening. China has opened up a little bit to us as well.
So, you know, it's just the speed of the opening of borders. The demand is there; most definitely, the demand is there and it's pretty V-shaped.
QUEST: Really?
FERNANDES: Yes. I mean, if you look at our domestic traffic, we keep adding capacity. The number of people who probably didn't know Malaysia or
Thailand as well as they do now, because they're flying to different destinations every day, over the weekend or all of the days, and you know,
some of our routes are almost back to pre-COVID frequency.
(END VIDEOTAPE)
QUEST: More of that interview you can see on "Quest Means Business" tonight. The whole interview you can see on QMB tonight, including the
question, the age old question, will they merge will Malaysia Airlines? Hear Tony Fernandes' answer on that in "Quest Means Business."
In a moment, we've heard from the travel market. Now, what about insurance? Well, the insurance market, the CEO of Lemonade will be with me in just a
moment. There, it is going to be about questions of college students. In a moment.
(COMMERCIAL BREAK)
[09:51:11]
QUEST: The startup insurance company, Lemonade has announced its first results since it went public. Interestingly, as part of the numbers, they
are now warning about college campuses remaining closed in the autumn, and apparently that's a significant risk to the business.
Look at the price on the IPO, $69.41, now down at $60.06. I guess that's not a particularly dramatic change bearing in mind the circumstances.
Daniel Schreiber is with me, the CEO and co-founder of Lemonade. It is good to see you, sir. We will talk more.
Let's delve -- these college campuses, what is the problem with the students not returning?
DANIEL SCHREIBER, CEO AND CO-FOUNDER, LEMONADE: We don't know that there will be a problem. We were just saying that in passing as we've seen very
strong seasonality in Q3, it tends to be a moving season because of the academic year both for students and parents. So we were just saying there's
some uncertainty.
Though I have to tell you, so far the uncertainty that we flagged for COVID has kind of flipped in our favor. So, in the second quarter, we took a lot
of precautionary steps and cautioned that there might be an increase in churn and there might be delays in payments and there might be all the
different other impacts to our business, and it worked out the other way.
We just reported a quarter where our revenue grew 117 percent year-on-year, our gross profit grew 218 percent year-on-year. So far, we've seen,
notwithstanding the pandemic, an increase in our efficiency and an increase in all of our key performance indicators.
The guidance we gave for Q3 would suggest that that will continue, notwithstanding the warning that you're highlighting.
QUEST: And this business, this increase in business, is it new people coming into insurance, buying insurance for the first time, or are you
taking from other insurance companies?
SCHREIBER: That's one of the unusual things, even extraordinary things about Lemonade.
If you've watched five minutes of television, including your show, you'll see commercials which are really predicated on the I-switched and I-saved
value proposition. That's what insurance is all about. Fifteen minutes can save you 15 percent. You've seen the commercials. Lemonade doesn't work
that way.
So something like 90 percent of our customers are first-time buyers of insurance. And really among the younger cohort, the first-time buyers, the
people who are stepping onto the conveyor belt of life. We are now one of the market share leaders in the United States and our strategy is then to
grow with them.
QUEST: Now, you remember last time we spoke, I told you I got a quote from Lemonade. I sort of managed to shove it at the bottom of my briefcase and
not looked at it again. How do you now get people like me who may have had a tickle and an interest, to follow through and complete? Because that's a
way of getting switchers.
SCHREIBER: It is, and we do get switchers, and by saying that 90 percent are first-time buyers, it's clear that 10 percent of our business are
switchers.
But the beautiful thing about first-time buyers is that you're competing with non-consumption that has got to be the most strategic and least
expensive way to acquire customers.
In fact, our cost of acquiring customers have halved over the last year, so every dollar spent today goes twice as far as it did just as recently as Q2
of last year.
So we're very comfortable focusing on that dynamic and then trying to delight those consumers so that as their needs grow, they'll grow with us.
And we're seeing that in our numbers as well.
Renters who have been with us for three years are now paying us more than 50 percent more than they did earlier and about 10 percent of our condo
insurance buyers started life with us as renters and then grew and their premiums go from $60.00 to $600.00, in some cases, to $6,000.00.
[09:55:06]
SCHREIBER: So you can see orders of magnitude increase in premiums without any corresponding cost to acquire the incremental revenue.
QUEST: Good to see you, sir. Thank you for joining us. I appreciate your time this morning. Thank you.
SCHREIBER: Thank you.
QUEST: Now to the market, let me show you what it looks like before we leave you and how it is trading.
We are well and truly underway. The business is being done and we are -- a gain on the Dow of just half a percent. The NASDAQ is going to gain, is
going to be up for the first time in several sessions. The S&P is also.
And then we are going to -- well, how do I know? I was going to say make the all-time high on the S&P. We're still 20-odd points off there. That's
sort of a bit of a heft and a move to make.
Otherwise, I will have "Quest Means Business" for you in just four or five hours from now. You know me and the clock.
Whatever you're up to between now and then, I hope it's profitable. I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
END
