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Quest Means Business
Mobile World Congress Canceled Amid Coronavirus Fears; Former Goldman CEO Warning That Bernie Sanders Would Tank The U.S. Economy If Elected; Donald Trump Speaks Publicly About Roger Stone Case. Aired 3-4p ET
Aired February 12, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:12]
RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: Records, records, records galore. One hour to go on trading. Straight up and it's
held those gains throughout. The steadiness of this is interesting, but there's also a record on the S&P, and another record on the NASDAQ.
And as you look at the market, these are the reasons why.
Well, one of the world's largest tech conferences has been called off. Organizers are blaming the coronavirus, even though it seems the number of
infections is on the way down.
Bernie Sanders scores a key victory in the Democratic primary race. The former Chief Executive of Goldman Sachs claims his policies could tank the
economy.
And the flip phone makes a comeback. Samsung's latest flagship device takes inspiration from the 90s relic.
Tonight, we are live in the world's financial capital, New York City. Gray, but not too cold. It is Wednesday. It is February the 12th. I am Richard
Quest, and of course, I mean business.
Good evening, we begin tonight. One of the world's biggest conferences has been cancelled as a result of the corona virus outbreak.
In the last few hours, Mobile World Congress announced that it was off. It was less than two weeks before the start.
Mobile World Congress is an event of crucial importance to the technology and the telecom industry. It's often the site for high profile project
launches, however, with coronavirus biting, one by one, major exhibitors like Amazon Intel, LG and Nokia announced they would not attend.
And an hour ago the event organizers bowed to the inevitable and cancelled this year's Summit entirely.
Hadas Gold is in London. What did they say?
HADAS GOLD, CNN BUSINESS REPORTER: Well, Richard, they pretty much said that due to concerns over the coronavirus outbreak and travel concerns that
essentially, it was unsustainable and that the organizers could no longer hold the event.
Of course, this comes just honestly days before the event was scheduled to start taking place on February 24th.
Typically, this conference brings in around 100,000 people to Barcelona, where as you said, these huge companies usually make big product launches.
This are important times for them, but instead we saw these big names pull out saying that they were trying to protect their employees, their
customers and their vendors from anything related to the coronavirus despite the fact that the conference had actually instituted what they said
were safety measures.
They were banning anybody who had been in China in the 14 days preceding the conference. They said they were going to institute temperature
screenings. But clearly it wasn't enough and you can't exactly have a major telecom tech conference without these major companies there like the
Sony's, like the Nokia's, like the Ericsson's -- it just doesn't work.
And what's surprising is that they're not postponing it, Richard. They are completely canceling it. The next one won't happen until next year.
QUEST: And I suppose, there wasn't an inevitability about this, not only as the big names pulled out, but as there is this call, you know, that we
shouldn't all be having large get-togethers. And in conference terms, it really doesn't get much bigger than MWC.
GOLD: Exactly, with around 100,000 attendees and they say that typically, about five to six percent of those attendees come from China, and you're
going to be in an area, lots of people together for many hours, lots of handshakes, which they say we're not supposed to do, and lots of contacts,
lots of different people.
And pretty much, it honestly kind of all comes down to the fears because despite the fact that Spain hasn't necessarily been a hotbed of this virus,
when these companies say we don't want to take the risk, we don't want to force our employees to go somewhere that they might not want to go. It was
inevitable this is going to come.
But it's also a blow to Barcelona because this conference brings in usually more than $500 million for the city and 14,000 temporary jobs.
QUEST: Good to see you. Hadas in London with that story.
The markets now and fresh records for U.S. stocks. Solid gains on the Dow, the NASDAQ, and the S&P. Some of the stocks that have been hit hardest by
coronavirus outbreak, making a really substantial comeback.
So how about Wynn? It was up three percent yesterday, it's up another three percent today. It's almost regained all its losses, as one might have
expected.
And then analysts pointed to figures from the last few days, appearing to show the number of new cases leveling off.
The World Health Organization says it's too early to predict if it will get better or worse. Joining me, Ethan Harris, Head of Global Economics at Bank
of America. He is with me. Good to see you.
ETHAN HARRIS, HEAD OF GLOBAL ECONOMICS, BANK OF AMERICA: Good to see you.
QUEST: What do you make of it? What do you think? What's your understanding of what's likely to happen economically with coronavirus?
HARRIS: Well, first of all, I think that it's too -- as you said with your report, it's too early to know where the virus is going. I mean, right now
in China, there's a big reengagement in the economy where people are coming back to their home city from vacation. They're starting to commute to work,
they're starting to go shopping.
And so we're going to find out a lot about the depth of the disease and the transmissibility of the disease in the next few weeks.
And I think that's why the experts are reluctant to make any call at all on this.
At minimum, this means a bad first quarter for China and some small spillover to the rest of the world. But if the virus really goes outside
the Hubei province and affects more of China and this opening up of the economy they're trying to do right now is reversed, then it's going to be a
problem.
[15:05:45]
QUEST: Jay Powell said yesterday, the U.S. economy is in very good shape. The numbers are all looking really very, very good. I mean, the
unemployment way down, even the employment rate ticked up, but that was a good enough -- that was for an advantageous reason as well. Interest rates
remain low and inflation.
Does this mean that this rally, this bull market at the moment that's in full flood is justified?
HARRIS: Well, I think it's justified if you take the risks off the table and one of them is staring us right in the face here with the coronavirus.
And again, I mean, right now the market is looking at this drop in the number of cases per day and that looks pretty good, but that's before we
find out how the virus proceeds with a fully employed economy.
QUEST: So let's just put coronavirus off to one side. I know that's a big if and a big but. But, Ethan, the trade spat, the tariffs are still there,
but the spat at least seems to have abated.
It seems that one by one, risks have been removed -- except exogenous events -- have been removed from the table just in time for now an
election.
HARRIS: Yes, and I think that's right. I mean, the election clearly motivated the trade deal. And so that raises the question what happens
after the election?
But for now, we're in a very healthy economy that really does well, absent a shock. The stock market rally is justified on the grounds that A, we're
in a very low interest rate world. So the valuations of stocks should be high.
I mean, people don't really want to hold bonds, they want to hold stocks, and you've got a healthy growing economy.
And then you have the Fed. Look at how friendly the Fed is these days? The Fed is trying to encourage inflation rather than fight inflation. You can't
get a more dovish fed than that.
So the market has got some, you know, some tailwinds behind it here.
QUEST: I know it's always a case of gosh, it's barely got going and I'm already asking when it's over. But there is a case for saying here, we saw
the temper tantrum the markets flipped through when interest rates rose, admittedly, the last one.
But at some point, again, is your best guess, a hike or a cut as the next move?
HARRIS: Well, I think that in the next year, a cut is much more likely than a hike.
QUEST: Really?
HARRIS: Yes. Because I think that -- remember, the Fed is looking at the economy. They're saying we've not really succeeded in bringing inflation,
wage growth, income growth back to normal. We've got to make sure that happens before the next recession hits. That's why they're being so dovish.
So the Fed is providing a floor under the markets. Now, you're right. At some point, we're going to reach a hurdle that the markets can't get over,
like inflation picking up or the virus may --
QUEST: But it didn't pick up last time -- it didn't pick up, did it?
HARRIS: No, inflation hasn't really picked up.
QUEST: So are we in a sort of Japanification and barring -- except there is growth here. There is growth there.
But it seems that no matter what happens to monetary policy and stimulus, even with the additional stimulus of tax cuts, we should have been seeing
inflation up towards two percent.
HARRIES: Yes, and I think that it's a massive challenge, but at least we have this. We have a Central Bank that unlike the BOJ back in the days when
they allowed deflation that's really trying extremely hard and still has ammunition to try and create that inflation.
So I don't -- I think it's too early to declare us being Japanified here.
QUEST: Thank you, sir. Always good to have you with us. Thank you.
HARRIS: Pleasure.
QUEST: I really appreciate it. Now, the man who used to run Wall Street's most notorious bank is warning that Bernie Sanders would tank the U.S.
economy if elected.
The self-avowed Democratic socialist, that's Bernie Sanders, not Lloyd Blankfein, by the way. He won the New Hampshire primary on Tuesday night,
and it's now the front runner to take on Donald Trump.
Lloyd Blankfein of Goldman tweeted, "If Dems go on to nominate Sanders, the Russians will have to reconsider who to work for to best screw up the U.S.
Sanders is just as polarizing as Trump, and he'll ruin our economy and doesn't care about your military. If I'm Russian, I'd go with Sanders this
time around."
Surely, a man like Lloyd Blankfein hardly ever tweets. His criticism is a badge of honor for Sanders.
Speaking to CNN's Annie Grayer, he explained why he thinks Wall Street is so worried about him.
[15:10:08]
(BEGIN VIDEO CLIP)
SEN. BERNIE SANDERS (I-VT), PRESIDENTIAL CANDIDATE: A billionaire executive on Wall Street doesn't like me. I am shocked by that, Annie. I am
really shocked.
Look, what Mr. Blankfein and others are worried about is that we're going to start breaking up the large Wall Street banks that nearly destroyed our
economy because of their illegal activity.
We're going to make Wall Street and billionaires start paying their fair share of taxes. So needless to say, I am not too shocked that Wall Street
CEOs don't like.
(END VIDEO CLIP)
QUEST: Bernie Sanders wants to rein in private banks by capping credit card rates and creating a public banking alternative, other policies that
he wants to introduce. He wants to propose an extreme wealth tax for people like Blankfein. His net worth is estimated at $1.3 billion.
Under Sanders' plan, he'll be subjected to a progressive five percent tax. It could take more than $46 million from his personal fortune.
John King is CNN's Election Night Magic Wall master. It wouldn't be. Thank you, I thought I was going to be cheated out of a magic wall from you,
John. Not a bit of it.
All right, last night. The first question, how important is New Hampshire in terms if you look historically at who gets eventually the nomination?
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: New Hampshire's track record of the winner going on to the nomination actually is not that good. Bernie
Sanders won New Hampshire four years ago, Hillary Clinton was the nominee. We could go back through that history.
But it is important in this race, Richard, just for momentum early on. You win the nomination by getting delegates, a very small number of delegates,
24 in New Hampshire, a small number in Iowa. So it's not about delegates just yet. It's about momentum.
So that's the big fascinating question today. Let's just look at the results. Sanders wins, but just barely, right? This is Vermont. New
Hampshire is filled in here with the vote.
This is Bernie Sanders home state, next to home, he is a neighbor. He just barely won over the former Mayor Pete Buttigieg, nationally pretty unknown.
Senator Amy Klobuchar from Minnesota just becoming known.
Elizabeth Warren -- this is the big disappointment. You've talked about Lloyd Blankfein a minute ago. He also watches Elizabeth Warren quite
closely. And she's in single digits close to home, a huge disappointment. The former Vice President, even below that.
So now you go through the results. You say, okay, a win is a win, Bernie Sanders won. He has momentum going forward, however, should it have been a
bigger win? This number, 75,000 and change. Just go back four years. Sanders trounced Hillary Clinton four years ago, won more than twice as
many votes as that.
Now, to be fair to Senator Sanders, a lot more candidates this time, but a lot of people are going to ask, where are all those young voters? Where was
the high turnout? Where was the energy?
You were just talking about the economics of Bernie Sanders. We saw that, Richard. I want to show you this.
QUEST: Sure.
KING: In the in the vote last night, we saw some of this. Number one, look at the exit polls. Bernie Sanders proudly will fight with Wall Street
because he wants to be the blue collar candidate.
Among those in New Hampshire who voted yesterday who make $50,000.00 a year or less, a big Sanders winner.
Working class blue collar people, 38 percent to 17 from Mayor Buttigieg. Warren, Klobuchar, Biden below them -- but -- but there is a concern among
more affluent voters about Senator Sanders, maybe not as affluent as Wall Street executives, but look if you make $100,000.00 or more in New
Hampshire and you voted in the Democratic primary yesterday, Buttigieg wins big, followed by Klobuchar, Sanders in third.
One other way to show you this, if you go through the New Hampshire demographics, and you look at the 25 wealthiest towns by median income.
What are the 25 wealthiest towns in New Hampshire? Where the affluent voters live? Look at all this green. Most of the light green is Buttigieg,
the dark green is Klobuchar. Of those 25 towns, Bernie Sanders won only two.
So the economic argument you started with for Wall Street executives is also playing out among Democratic voters as this race goes on.
Bernie Sanders says I'm Mr. Blue collar -- the moderates are winning here. The question is who can bridge and broaden the coalition?
QUEST: John, I'm going to just pull you there in a moment. We are expecting Donald Trump speaking at the White House. This is something
you're well -- you're well-familiar with being interrupted by the President who suddenly decides to speak. So I apologize.
But that's fascinating. We will talk more about New Hampshire and about the economics and I do need to get your take next time we speak on Mike
Bloomberg, another billionaire in the race. John King. Thank you, sir for that.
While we wait for the President, let's join him at the White House.
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: No, not at all. He was treated very badly. Nine years recommended by four people that perhaps they
were Mueller people. I don't know who they were -- prosecutors. And I don't know what happened. They all hit the road pretty quickly.
Look, you had somebody, just recently, you saw what happened. He got two months. He got sentenced to two months for leaking classified information
at the highest level.
QUESTION: Who is that?
TRUMP: They treated Roger Stone very badly. They treated everybody very badly. And if you look at the Mueller investigation, it was a scam because
it was illegally set up.
It was set up based on false documentation and false documents. You look at what happened, how many people were hurt, their lives were destroyed, and
nothing happened with all the people that did it. It all was just scam.
[15:15:10]
TRUMP: Where's Comey? Where's Comey? What's happening to McCabe? What's happening to Lisa -- and Peter Strzok and Lisa Page, what's happening with
them?
It was a whole setup. It was a disgrace for our country and everyone knows it, too. Everyone, including NBC, which gives a lot of fake news.
The fact is that Roger Stone was treated horribly, and so were many other people. Their lives were destroyed. And it turns out, you look at the FISA
warrants and what just happened with FISA where they found that it was fixed, that it was a dirty rotten deal.
So when you look at that, and you see what happened to Roger Stone, but think of it? A man leaks classified information -- highly classified. They
gave him two months.
Roger Stone for doing nobody even knows what he did. In fact, they said he intimidated somebody. That person said he has no idea he was going to jail
for that. That person didn't want to press charges. They put them in for nine years. It's a disgrace.
And frankly, they ought to apologize to a lot of the people whose lives they've ruined. Hi. Next question. Next question? Go ahead.
QUESTION: (INAUDIBLE).
TRUMP: Wait, wait, what?
QUESTION: Are you considering a pardon for --
TRUMP: I don't want to say that yet. But I'll tell you what, people were hurt viciously and badly by these corrupt people.
And I want to thank -- if you look at what happened, I want to thank the Justice Department for seeing this horrible thing and I didn't speak to him
by the way, just so you understand.
They saw the horribleness of a nine-year sentence for doing nothing. You have murderers and drug addicts, they don't get nine years. Nine years for
doing something that nobody even can define what he did.
Somebody said he put out a tweet, and the tweet, you base it on that.
We have killers, we have murderers all over the place, nothing happens. And then they put a man in jail and destroy his life, his family, his wife, his
children. Nine years in jail, it's a disgrace.
In the meantime, Comey walks around making book deals to people that launched the scam investigation. And what they did is a disgrace and
hopefully it'll be treated fairly, everything else would be treated fairly.
QUESTION: (INAUDIBLE).
TRUMP: Go ahead, please.
QUESTION (through translator): Mr. President, I congratulate for the macroeconomic indicators. They are excellent, but in that (inaudible)
growth expectations are going down especially the growth in (inaudible) which is at zero. How can you help Latin American economies? How can we
help Ecuador, Mr. President? And congratulations.
TRUMP: So thank you. I love that question. I wish we had some people like that here. He's congratulating us on our great success as a country and I
want to congratulate you, too, because what you've done an Ecuador and your President have done a fantastic job. Thank you very much.
QUESTION: Mr. President, you're concerned about the four prosecutors?
QUESTION: Thank you, Mr. President --
TRUMP: I am not concerned about anything.
QUESTION: (INAUDIBLE).
TRUMP: I am not concerned about anything. They ought to go back to school and learn because I'll tell you what, the way they treated people, nobody
should be treated like that. Go ahead.
QUESTION: It's been 17 years since the last time a President from Ecuador visit the White House and the President of the United States in an official
visit.
TRUMP: And when was it? When was it?
QUESTION: Seventeen years ago. It was with George W. Bush in 2003. What change now? What is your specific interest with Ecuador now and what
(inaudible). Thank you
TRUMP: She did a good job. Go ahead, I think I understood.
LENIN MORENO, PRESIDENT OF ECUADOR (through translator): Ecuador has, after having gone through very hard times, and especially in work in
regards to its international relationships, has decided to come together again with the international community and bring -- refresh relationships
to those who are -- who have the same way of thinking as we do. We wanted to come closer to them.
QUEST: It's a good way there to leave the Ecuadorian President talking at the White House, he managed to get a word and that's an achievement.
[15:20:10]
QUEST: As a result of the questions being asked. It transpires that the President -- U.S. President has said something of significance before that,
we will of course come back to you.
The coronavirus outbreak has set businesses of all count, now a major sporting event has been postponed, too. In a moment.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. That's more QUEST MEANS BUSINESS in just a moment.
A lot more to come to you down from the top, and also all those records that are in the markets, we will update you so you can see exactly how we
end the day.
But before all of it, this is CNN and here on this network, the facts and the news always come first.
The World Health Organization says, it remains too early to predict when the coronavirus outbreak might end. Officials say the number of new cases
in China has stabilized, but they are warning the outbreak could still go in any direction.
So far 44,000 cases worldwide and 1,100 people that died.
The world's largest mobile phone conference has been cancelled as the results of concerns over the coronavirus. The annual event, Mobile Congress
World typically draws more than 100,000 people. It was to take place in Barcelona later this month. It was called off after more than a dozen major
companies pulled out.
Bernie Sanders was won the Democratic primary in New Hampshire. It is the second contest this year. Pete Buttigieg came in as a close second, and
Senator Amy Klobuchar finished third, stronger than many have expected.
The race that moves from mostly white Iowa and New Hampshire to far more diverse parts of the United States, in Nevada and South Carolina.
Sudan has agreed to hand over the ousted former President, Omar Al-Bashir to the International Criminal Court, where he will face war crimes charges.
They stem from the government crackdown in Darfur more than a decade ago.
Al-Bashir was removed from power last year following massive protests
[15:25:10]
QUEST: And we return to the coronavirus outbreak that has now hit the world of sport as well.
Formula 1 Chinese Grand Prix is being postponed. It was originally scheduled for April the 19th in Shanghai. Joining me now as Christian Sylt.
He is the publisher of "Formula Money."
They say it's postponed. Good to have you, sir. They say it is postponed. Do they really mean canceled? Because shoehorning back into the schedule in
what is exceptionally a complex schedule to begin with, won't be easy.
CHRISTIAN SYLT, PUBLISHER, "FORMULA MONEY": No, I think it would be extremely difficult. And the way it looks to me is that really any attempt
to get it back on the calendar will be the last resort, last ditch effort, so I can't see it happening.
QUEST: I suppose you could put it at the end, couldn't you? But then the last one is by contact, it is usually the last one.
SYLT: That's it. That's the problem. It's Abu Dhabi. And as far as everybody knows, they have -- and it's kind of been publicized in the past
that they have a contract to be the last race.
So I mean, I can't see China filling that spot, essentially coming afterwards.
QUEST: And even if you wanted to start moving around. Give us some idea of the complexity of just -- of one F-1 race, getting it from A to B.
SYLT: Oh, wow. I mean, in Europe, I mean, you have 300 trucks that's going to a European race. Obviously, China is long haul, but you're talking about
six or seven 747s really. You know, hundreds and hundreds of tons of freight.
I mean, it's extremely difficult and the way that the race is -- people probably don't realize that the races aren't just positioned where they
are, internally with it for the convenience of Formula 1's calendar, but also not to clash with other major sporting events, other major events
internally in each country.
QUEST: Is it your understanding that there was much debate about this decision?
SYLT: Yes, and I'm sure there's a financial reason for that, too. I mean Formula 1's contracts make it clear that in cases of an epidemic, they
could lose revenue.
So, I mean, the last thing they are really going to want is for this race to be ultimately for the brakes we put on it.
QUEST: Right. But I guess what I'm saying here is, you know, Formula 1 has quite a lot of power against certain cities in this and they wield it
judiciously, some would say, arguably others would claim.
However, when you're dealing with China, and Formula 1 needs China, arguably, Northern China needs Formula 1.
SYLT: Yes. Now, I think you're absolutely right. In fact, I'm quite sure there is another reason why they haven't actually given the red light to
the race. That's why they are still looking to work to try and reschedule it for the simple reason as you say that they want to really keep on
China's side.
And I mean, interestingly enough, they announced a partnership with a local marketing agency a year or two ago to explore the possibility of a second
Chinese race.
So you're looking at a scenario now where there's a strong likelihood there won't even be one this year.
QUEST: Let's talk generally about Formula 1, good opportunity, since we have your expertise with us. What is the health of it at the moment?
After the Ecclestone years, after all the controversies that there had been when many, many of the teams felt that they were either cut out on the
financial side, or that the thing was being run as a personal fiefdom. Does the new management now at least enjoy more collective support?
SYLT: Yes, I mean, I don't think there's any way you can deny that. I mean, certainly the way things look at the minute, I mean, the contracts
with the teams, so-called Concorde Agreement, named after Place de la Concorde in Paris. This is the contract that commits all the teams to race.
That expires at the end of this year.
And normally there will be a talk of teams pulling out, setting up a rival series. We've had none of that. And even though the contract hasn't been
re-signed, it's essentially a formality.
You'll see teams have already announced deals with their drivers that stretch beyond this year with sponsors, with engine manufacturers. Sure. I
mean, there's definitely more collective support.
The whole business itself however hasn't had that great boost in terms of an acceleration in its revenue and certainly not in acceleration in its
profits that some thought would happen after the new owners, Liberty Media took over.
Maybe that will happen in future. Who knows?
QUEST: Very good to have you with us, sir. I much appreciate it.
SYLT: Always a pleasure.
QUEST: Thank you. We will stay with Hong Kong where the economy shrank by more than one percent last year.
Months of increasingly violent protests, you will be well familiar with, paralyzed the streets and scared away the tourists. Now, add coronavirus,
which threatens to derail things all over again.
CNN's Kristie Lu Stout is in Hong Kong.
(BEGIN VIDEO CLIP)
[15:30:00]
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN BUSINESS CORRESPONDENT (voice-over): It was the last thing this city needed, the outbreak of a new virus, causing fear and panic
with residents hunkering down and staying away from retail centers and eateries, including this famous restaurant in Causeway Bay.
(on camera): Last year, locals and tourists would wind up outside and around the corner, just sample its misua-recommended dishes, but these
days, it's far too easy to get a table.
(voice-over): Lo Cheong Hei's business had already been hammered by months of anti-government protests, but the outbreak has sparked another
devastating punch.
LO CHEONG HEI, RESTAURANT MANAGER, SE WONG YEE (through translator): It's a huge impact. Ever since we came back from the lunar new year, our
business has gone down 70 percent.
LU STOUT: On February the 3rd, Hong Kong released its latest GDP results and it was ugly. The economy shrunk by 2.9 percent year-on-year in the last
quarter of 2019. That was when the protests reached a climax with violent clashes in multiple universities. The report follows a quarter of
contraction triggered by the protests and the trade war, but does not factor in the incoming hit from the virus.
In a blog post, Hong Kong Financial Secretary, Paul Chan, writes, "the virus outbreak will definitely cause a double blow to the economy with
catering, retail, tourism and consumer sectors falling into a deeper Winter." In November, the number of visitors to Hong Kong fell 56 percent
over the previous November, the worst drop since the SARS outbreak of 2003.
The latest outbreak will push tourism numbers down even more with Chan warning that the new coronavirus could hit the economy harder than SARS,
given the city's greater reliance on tourism and retail over the last 17 years. Most of Hong Kong's visitors come from mainland China where many
cities have placed residents on lockdown.
And Hong Kong has closed a number of border crossings to limit new arrivals and the spread of the virus. As with SARS, only when the virus is contained
can the Hong Kong economy bounce back.
UNIDENTIFIED MALE: We expect the Hong Kong economy to recover, but any recovery is not going to be rapid. We're going to see properly even a
slower recovery from the coronavirus outbreak because the fear factor is even higher as well.
LU STOUT: But Lo can't afford to wait any longer. To break even, he needs to make $6,000 a day, his daily take has dropped to below 4,000. He is
bracing for the worst.
HEI: (SPEAKING IN FOREIGN LANGUAGE)
LU STOUT: At the back of his restaurant, Lo offers incense to a warrior god, a much needed prayer for prosperity and protection. Kristie Lu Stout,
CNN, Hong Kong.
(END VIDEOTAPE)
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Figures from the World Health Organization are showing a number of new coronavirus cases continuing to
drop off. The W.H.O reported 2,068 new cases on Wednesday. The number of deaths has fallen as well as W.H.O officials saying it's too early to
predict the outbreak or the end of the outbreak. Some of China's biggest e- commerce companies are coming to the rescue for those workers laid off due to the coronavirus.
JD.com is pledging to create more than 20,000 new temporary positions, such as warehouse workers, couriers and drivers. Alibaba has announced a similar
plan and the hiring spree comes as demand from booms, from shoppers stuck at home under quarantine. Clare Sebastian is with us. Let's dissect this.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right --
QUEST: They're creating new jobs.
SEBASTIAN: Well, they're sort of temporary jobs. I think some of them may end up being permanent, and I think all that depends on how long this goes
on. JD.com says a lot of this is in their logistics. They're talking about warehouse workers, pickers, couriers, and obviously as you mentioned there,
this isn't just about doing a good deed.
The JD.com statement says they're trying to minimize the impact of the epidemic on employment in the short term, but it's not just that because
they need these people because the demand is surging. They are being relied upon to get products to people, healthcare supplies, their recent delivery
--
QUEST: Yes, but you can't get these people into those jobs, up and trained in the -- I mean, this smacks -- call me a cynic if you will, but this
smacks of somebody saying start employing, there are people -- you know, they're heavy-handed for state --
SEBASTIAN: Right --
QUEST: Hinting that people need to be employed to pick up the slack.
SEBASTIAN: I mean, I agree, it does smack -- certainly, we've heard that Xi Jinping has said to companies, you know, please try to increase your
digital capacity here. Because this is something that a lot of people are looking at. We had -- you know, just in the last few days from Yum China,
they said that they're doing contact list delivery, they're delivering food and then hurrying the driver to keep a safe distance.
So, people are innovating in these area as well, but it's clear that e- commerce delivery, that is a growing area in the middle of this outbreak. JD.com stock is up 18 percent this year on the Nasdaq.
[15:35:00]
QUEST: And Carnival Cruises, we've had some numbers --
SEBASTIAN: Yes --
QUEST: From them.
SEBASTIAN: Approximately --
QUEST: Well, it's given a profit warning, but I suppose it's obvious why?
SEBASTIAN: Right, I mean, they say that it's not just China now, they've had to obviously suspend voyages out of China, but it's also affecting
other parts of Asia, Richard, and I think, you know, even though we're seeing the numbers in terms of the outbreak itself, to sort of start to
tail off, the business empire just only really just starting to come out in the data. And travel in turn continues to be in the frontlines of this.
QUEST: OK, but I sort of come back to the point I was being -- said to you over the last few days. We know why it's happening --
SEBASTIAN: Right.
QUEST: We can unwind it in the future. I mean, it's lost revenue and it's gone from this quarter --
SEBASTIAN: Right --
QUEST: And some of it will be made back in the -- near future. But is there still a doubt about -- from companies they don't know how bad it's
going to get?
SEBASTIAN: I think absolutely. I mean, we're seeing sort of a slight drop off in the number of cases, but there's no real cure to this yet, Richard,
there's no evidence that it's meaningfully slowing down. And meanwhile in China, in terms of the companies that rely on it for supply chains, it's
very much been creaking back to work this week.
A lot of companies are having a variety of different problems getting their factories up and running. There's a patch work of local regulations that
are in play here. I think -- but even when we start to see sort of real evidence that the epidemic is tailing off, the business may take a while to
follow. I mean, you only have a stock market there, appears to think --
QUEST: Right --
SEBASTIAN: This is time to --
QUEST: That's the bizarre part --
SEBASTIAN: To buy the ditch, right --
QUEST: That's the bizarre part. I've got you on the one hand --
SEBASTIAN: Right --
QUEST: Not saying financial Armageddon, but suggesting serious woes, and over there, records on all markets.
SEBASTIAN: Well, I think those two questions there, are they buying the dip? Clearly, the answer is -- the second question is, should they buy the
dip? And there are those out there who think --
QUEST: Right --
SEBASTIAN: Not, that this is a continued sort of trend in this market that central banks fueled dip-buying, and now people should get real positive --
QUEST: Pretty bizarre.
SEBASTIAN: Yes, records --
QUEST: Three records --
SEBASTIAN: Yes --
QUEST: Meanwhile, hey, we'll talk about it more, thank you very much. Japan -- well, Nissan is suing its former Chairman Carlos Ghosn. Now,
Nissan seeking $91 million in damages related to Ghosn's alleged financial misconduct. Ghosn is denying any wrongdoing. His spokesperson told us,
"Nissan is trying to create a diversion on the eve of the Japanese group's worst expected financial results since 2009." I asked CNN's Michael Zeldin,
what's the chance that Nissan will get this money?
(BEGIN VIDEO CLIP)
MICHAEL ZELDIN, CNN LEGAL ANALYST: If all of his assets are outside of Japan, then acquiring them will take years if they can be successful at
all. If he has property holdings in Japan, I expect that they can seize them and try to take action to satisfy any judgment that they get. Whether
they get a judgment is going to be the trickier part.
QUEST: Right. And as for the -- I mean, that's going to be -- it begs the question why they're doing it if they have little chance of success other
than to legally mark the card.
ZELDIN: Yes, exactly. I think there's no question, but there's bad blood between the two. He is being sued for fraud and mismanagement, breach of
fiduciary duty, they say he took money, gave it to his sister, gave it to his lawyer, stayed in Nissan properties, didn't pay rent. He's turning
around and suing them to say he was wrongly terminated without good cause. So, this is, you know, a blood -- you know, sort of fight --
QUEST: Right --
ZELDIN: And we'll just see how it works out.
QUEST: Is there a grey area here because -- when he points out that the properties -- he always said they were Nissan properties, he never claimed
to own them, and all the other things he said -- he said, the board knew about them and he repeatedly says if you look at the evidence, the board
knew what was going on. None of it was personally done for him, and therefore what are they complaining about now, that grey area?
ZELDIN: Well, it may not be grey, maybe quite black and white. If this was a civil lawsuit in the United States with full discovery, we would get to
see his employment contract, we would get to see the minutes of the board, we get to see what was understood and agreed to and what wasn't. My
expectation is that normal C-suite CEO types have many perks that are available to them --
QUEST: Right --
ZELDIN: And that to go after them --
QUEST: Right --
ZELDIN: After the fact to say that --
QUEST: Right --
ZELDIN: They were somehow used without permission probably doesn't sit very well legally.
(END VIDEO CLIP)
QUEST: After many disappointing investments, Softbank's profits took a massive hit. There may be hope for the Japanese tech firm, and we'll show
you why in just a moment. Here's QUEST MEANS BUSINESS live from New York.
(COMMERCIAL BREAK)
[15:40:00]
QUEST: (SPEAKING IN FOREIGN LANGUAGE) open-and-shut case, this is the flip phone that was and now the flip phone is back. Samsung has unveiled a
Galaxy Zed Flip or Z-Flip depending on which side of "The Atlantic" you're on. It's its second attempt at a foldable phone. The tech has come a long
way in more than 20 years.
Think about it, in 1996, Motorola StarTAC first flip phone, I remember it, I had it. In 2002, Sanyo with the SCP 5300, that's catchy. Then in 2004,
the Motorola Razr which of course was very well-known. And then in 2020, you've got the flip. Samantha Kelly is with us with the new phone. All
right, tell me about the new phone.
SAMANTHA KELLY, CNN BUSINESS EDITOR: Yes, OK, so this is the new Z-Flip. It's super compact, you can play with it there. So, it's a little different
than the first -- Samsung's first attempt at the foldable smartphone which had some issues last year. They moved the hinge now which is in the middle,
so it opens like a clamshell design there, a little different than before, was opening like a book.
I actually really like this design because it reminds me, of course, of the flip phones from years ago. And I kind of also like how -- I'm so used to
having a phone, just glare at you all the time. You can shut it and power down a little bit --
QUEST: But the crease is there, now you -- that's bothering you --
KELLY: Yes --
QUEST: But it wouldn't necessarily bother me there because you get used to it.
KELLY: Yes, I think like the more you play with it, the more you get used to it. But you can see it, just a little bit right where the hinge is, and
you can -- the sort of where you're always opening apps and kind of playing with things, so you do feel it a little bit.
QUEST: But what's the advantage? Now, of course, you've got here the other brand new, top run of the mail --
KELLY: Yes --
QUEST: Run of the game, so the screen size is the same. Besides bragging rights, what advantage does it give you to be able to do that?
KELLY: Yes, well, for me, I love it being smaller. I'm kind of tired of phones that open and get even bigger like the tablet category that was big
for a while. I like being able to kind of shut it down, throw it in your bag, and not have to worry about it so much. And it also has a display that
has notifications on the front, so you can see if someone texts you, you can see the -- what time he sent --
QUEST: Well, you mean, you see on the front too --
KELLY: Right here --
QUEST: Oh --
KELLY: Yes --
QUEST: On the handle, so it's not really closed.
KELLY: It's not totally closed --
QUEST: It's not closed, it's not closed --
KELLY: That's right --
QUEST: It's still there, available, to just sort of --
KELLY: Right, yes, now, it's not the only foldable smartphone on the market. Razr who, you know, kicked off and was the biggest selling flip
phone back in 2004 before the iPhone, they have one as well, so, this will go head-to-head with that. It's a little bit cheaper as well.
QUEST: And if you hold a new one in that direction, you hold that --
KELLY: Correct --
QUEST: Anybody who's really weren't thinking about just how this has changed, well, these were the two old ones. You can see the difference in
the size of the screen. It's not -- this is futuristic, there's only one, but when these came out, you could just go -- and then, try and do that
with your --
KELLY: Takes a little bit of extra effort there. You can do it, but, well --
[15:45:00]
QUEST: Good to see you, thank you very much --
KELLY: Thank you --
QUEST: You just leave these with me, and you take the ones from the 1990s, and that's a fast swap. Thank you. Donald Trump is re-branding MAGA, "Make
America Great Again". Now, it means Microsoft, Apple, Google and Amazon. It could be a new bellwether index for the U.S. economy. It is QUEST MEANS
BUSINESS live from New York -- I do love these phones.
(COMMERCIAL BREAK)
QUEST: All right. Profits for the Japanese tech conglomerate Softbank dropped 99 percent from a year ago, 99 percent. Why? Well, here's the
money, look at the money, it threw lots of money into loss-making companies, so Uber got a large chunk of it, and then a whole load went into
slack as well. And if all that wasn't enough, well, it put into the waste bin WeWork needed $5 billion after a failed IPO sprint.
But fret ye not, there's still more. Sprint may have more money after the merger with T-Mobile because the Softbank has a huge investment in Sprint.
The price went up 70 percent, there's more money as Sherisse Pham explain.
(BEGIN VIDEOTAPE)
SHERISSE PHAM, CNN BUSINESS REPORTER: It was a day of contrast for Softbank. Softbank reporting on Wednesday that profits plunged 99 percent
last quarter compared to last year. The company was dragged down by losses in Softbank's $100 billion vision fund. The fund is still grappling with
huge losses from its investments in WeWork and Uber.
Softbank founder and CEO, Masayoshi Son admitting today that the fund's recent performance is scaring off potential investors for Vision Fund 2.
That fund was expected to raise $108 billion. Son now saying that it will fall well short of that goal.
MASAYOSHI SON, FOUNDER & CHIEF EXECUTIVE OFFICER, SOFTBANK (through translator): At the moment, I think that next fund size, it should be a
little bit smaller because, again, we have cause for concerns and anxiety to a lot of people.
PHAM: The abysmal earnings report came after Softbank's shares rallied to a new six-month high. Softbank's stock closing up nearly 12 percent in
Tokyo today.
[15:50:00]
Despite came after a U.S. court approved the merger of T-Mobile and Sprint. Softbank acquired Sprint nearly a decade ago, and Fund has been trying to
merge it with T-mobile for years. It will be a much-needed win for Masayoshi Son, proof that at least some of his big bets are still paying
off. Sherisse Pham, CNN, Hong Kong.
(END VIDEOTAPE)
QUEST: MAGA, "Make America Great Again", has a new meaning --
(COUGHING)
Excuse me, it's the trillion-dollar club. Now, instead of "Make America Great Again", MAGA, it means, Microsoft, Apple, Google and Amazon. It's a
new index that the president seems to like the look of. And if you take a look at the MAGA stocks since 2016, well, there you are, you see Amazon
roars at the best of them all -- and as you know, the best of them all is Microsoft, although, perhaps because Donald Trump of course gave Jedi the
cloud computing contract to Microsoft instead of Amazon.
But they're all way up there, the only one that's lagging in terms of that is Google. For all the bragging that Donald Trump has sparred with each of
these companies in some shape or form, on Microsoft it was immigration policy, Apple wants -- he wants iPhones made in the U.S. and they're going
along with that. For Google, it is the accusations from anti-conservatives who say there's a biased against them and Amazon, just a long public feud
with Jeff Bezos who also owns "The Washington Post".
MAGA, "Make America Great Again" or Microsoft, Apple, Google and Amazon.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, sir.
QUEST: Is -- does the -- Paul La Monica, guru Monica is here. Is it justified to talk about a MAGA index?
LA MONICA: Well, I mean, the MAGA index already exists, Richard, it's the S&P 500 because if you take those four companies and you add Facebook as
well, those are five firms that collectively are about almost 20 percent of the market cap of the S&P 500. So, clearly, investors are enamored with the
prospects for these tech giants. They've done well and they should continue to head higher, even though Trump's own administration, his government, is
looking to potentially crack down on these companies for anti-trust.
QUEST: So --
LA MONICA: Aside all of these acquisitions they've done in the past.
QUEST: I've got my pen ready --
LA MONICA: Sir --
QUEST: Ready. So, each one of these, whether they can justifiably say they've been helped by Donald Trump and the MAGA, Microsoft?
LA MONICA: Obviously, as you mentioned, the Jedi --
QUEST: That's right --
LA MONICA: Contract does help, and you know, I think that some of the things that, you know, the Trump administration has done to help American
tech companies in China. It's a net positive not just for Microsoft, but all of these firms.
QUEST: Apple?
LA MONICA: Apple, Tim Cook is such a friend of the White House now. He's often showing up there that he's often --
QUEST: Yes, but --
LA MONICA: He's often called Tim Apple.
QUEST: But the --
(LAUGHTER)
But the trade wars --
LA MONICA: The trade war has obviously hurt Apple and other tech companies.
QUEST: Google? Do they -- do they justifiably take thanks from Trump?
LA MONICA: Yes, I mean, I think -- you know, let's be honest. I think there got to be plenty of people searching for Trump news, and that has
helped them, YouTube as well, so yes.
QUEST: Amazon?
LA MONICA: Amazon is a --
QUEST: Yes --
LA MONICA: Tricky one because I think of all the companies that Trump has animosity towards, that's the one that he seems to be paying the most
attention to with regards to maybe having too much power over the retail world --
QUEST: Sure --
LA MONICA: But, again, it's hard to separate, given this president, is it anger about the coverage from "The Washington Post" which is critical of
Trump, and is owned by Bezos, but not Amazon, and also pure jealousy.
QUEST: It's always --
LA MONICA: Bezos is a lot richer than President Trump.
QUEST: All these --
LA MONICA: Not that Trump is poor.
QUEST: All of these companies, though, benefitted from the tax cuts --
LA MONICA: Yes --
QUEST: The corporate tax cuts and many of them have arranged their first quite legally, so they're not paying plenty of tax.
LA MONICA: Yes, all of these companies have done everything that they can to either lower their tax bills on a federal basis or avoid some of the
taxes. Obviously, that has been a concern for the current administration as well as many progressive Democrats. But as far as I can see, it doesn't
appear that any of the tech companies have been breaking --
QUEST: Right --
LA MONICA: Tax rules, they've just bent them in their favor.
QUEST: Look at that, record!
LA MONICA: I know, that 30,000 hat --
QUEST: That 30,000 hat is close -- is not far off. Peter Tuchman thinks it will be a matter of a few weeks before 30,000.
LA MONICA: I mean, we're less than 2 percent away, so, it's hard to bet against that. The weird thing that right now, Richard, is that, we're
almost done with most of the major earnings, so we're kind of in a bit of a news vacuum. I think Trump tweets will matter more, Fed speeches will
matter more because we're not going to have a lot of earnings data in the next few weeks.
[15:55:00]
QUEST: Good to see you, sir --
LA MONICA: Thank you.
QUEST: Guru La Monica, we've got the records, let me show you, as we head towards the closing bell --
(COUGHING)
Excuse me, but Jesse(ph) is right. The Dow, the S&P, and the Nasdaq are all at record highs. The -- that 30,000 inches ever closely. The markets are
shrugging off concerns about the coronavirus, particularly in stocks, that companies exposed higher in China. And what's interesting here is the way
it opened higher and it did not look back.
The market is actually closing at the best of the day, three-quarters of a percent now, 1 --
(CLEARS THROAT)
Excuse me, 1 percent up, 29,555. We'll have our profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, the markets are at record highs. You've got the Dow, the Nasdaq and the S&P 500 all really quite over the
top. And it really must beg the question, as we've discussed tonight, is it worth it? Is it justified, is there a great fall waiting to happen? For so
much of 2019, we were talking about the markets been over leveraged, too much debt, too much worries, a potential for emerging markets problems.
None of that actually happened. And so when Jay Powell says yesterday that the U.S. economy is in very good shape, think about it. Low interest rates,
just about no inflation. low unemployment, good job numbers and increases in hourly earnings. It would be perverse to stand here and say, it's all
going to go to hell in a hand basket. They're simply not the justification to be a doomsayer at the moment.
Now, that's not to say we shouldn't have an eye on clouds in the horizon over there, somewhere on yonder. But at the moment, the U.S. economy and to
a certain extent, others in Europe sporadically picked out is showing the resilience that one expects, and the gains that we will see which could
lead the S&P, saying to being over 25 percent to 28 percent up for this year.
I'm not saying it will be. I'm saying the scenario is set for what could be a bumpy year in the markets. And that's QUEST MEANS BUSINESS for tonight, I
am Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable. Record on the Dow, record on the S&P, record on the
Nasdaq and the markets. The day is done.
(BELL RINGING)
1530
END
