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Quest Means Business
U.S. Markets Volatile In Final Hours Of Trading; Eurozone Industrial Output Falls 17 Percent In April, Lebanon Central Bank To Inject U.S. Dollars Into The Market; Starbucks Changes Course; Florida And Texas Record Highest Single Day Of COVID-19 Cases Yet; U.K. Statues Boxed Up Over Concerns Of Vandalism. Aired 3-4p ET
Aired June 12, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:10]
ZAIN ASHER, CNN HOST: Welcome everyone. It has certainly been a strange end to a rocky week for the markets. Let's take a look.
A huge rally has largely disappeared. It was actually up by at one point by 670 points. It then fell, then it came roaring back. Those are the markets,
my friends, and these are the reasons why.
Donald Trump's advisers are urging caution as investors struggle to regroup from Thursday's bout.
The British economy suffers a staggering 20 percent drop in April alone.
And Starbucks gives in to employees who want to show their support for Black Lives Matter at work.
Coming you live from New York, it is Friday, June 12th. I'm Zain Asher. And this is QUEST MEANS BUSINESS.
All right. Good evening. We have entered the last hour of trading to end a dismal week on Wall Street. The Dow is on track this week for a nearly
seven percent loss so far. The Dow had actually rallied, as I mentioned earlier today.
And then sort of halfway through the day, that rally seemed to fizzle, and then it did come roaring back in just the past hour. We have still one hour
to go until the markets close for the week.
As you can see across your screen, it is all positive now. But let me tell you it has certainly been a volatile week marked by especially steep losses
that we talked about on this program just yesterday.
In the U.S., there are possible signs of a second coronavirus wave with cases rising in some parts of the country. President Trump advisers
addressed that fear.
(BEGIN VIDEO CLIP)
LARRY KUDLOW, DIRECTOR, NATIONAL ECONOMIC COUNCIL: I am not a health expert. But on the so-called spike, I spoke to our health experts at some
length last evening. They are saying there is no second spike. Let me repeat that, there is no second spike.
And Secretary Mnuchin said yesterday in testimony and I totally agree, we are not going to shut down the economy.
KEVIN HASSETT, WHITE HOUSE SENIOR ECONOMIC ADVISER: Nobody really knows why the market goes up and down in any given day. A lot of the news stories
said that there were renewed fears about a COVID uptick, and if you look at the data, there are some parts of the country that give one -- raise
concerns, but for the most part, the data continue on the trend that they have been on since the economy started to reopen which is that the
positivity rate for tests are going down.
(END VIDEO CLIP)
ASHER: As you heard, Larry Kudlow there in the first part of that soundbite basically saying there is not going to be a second spike and the U.S. is
not going to shut down for a second time in a row.
Let's bring in Quincy Krosby. She is the Chief Market Strategist at Prudential Financial. Quincy, thank you so much for being with us.
So, let's just talk stocks for a second here. We had, right out of the gate, the Dow was up 670 points at 9:30 this morning, and then, it sort of
did this, did this sort of strange W thing where it fell and then rose again, and then fell again. Just walk us through what happened here?
QUINCY KROSBY, CHIEF MARKET STRATEGIST, PRUDENTIAL FINANCIAL: Well, overnight the futures market was obviously more and more positive as we got
to the open. Then you know, the market I think is looking at this and sees the rise in hospitalizations. That's what they look at.
We know that cases go up, but what we want to see and what really bothers the market are just the hospitalizations rising. But overall, I think if we
can close in the green at all today, I think that's very positive because the damage in the market, the pullback, was fairly dramatic. We haven't
seen those kind of pullbacks in a long time. I mean, in fact, since 1993 for the S&P 500 that may been 20 times that we have had five percent or
more.
But that said, the market was ripe for a pullback. The market was overwhelmingly overbought. We had some parts of the silly season with
buying bankrupt companies, betting on them.
But overall, we will see how we can close. If we can close in the green, I think that is a positive, although, you have to believe that there are
still sellers waiting, waiting in the wings for another chance to sell.
The damage that we had obviously has produced you know more who want to get out, and I think many are waiting for that moment.
So, I don't think this is over. That pullback, the volatility index moving above 40, deep above 40 tells us that the market is primed for more of a
pullback.
The other aspect of this, just going into this downturn, know that many of the indexes regarding financial stability, financial woes, there weren't
any. The market was sanguine and that also set us up for a big pullback.
We are going to have a host of day the next which will be very important for the market. The market has risen on the back of less bad news, but I
think what the market needs, even at these levels is to have a dose of plain old good news.
[15:05:17]
ASHER: So, just in terms of what plain old good news would look like now, you mentioned there are obviously fears about a second wave and also if
terms of hospitalizations as well. What sort of government response at this point is the market looking for just to feel like things are under control
at this point?
KROSBY: Well, you know, we have heard from a number of the states that at least the localities, not necessarily at the state level, are planning on
restricting the opening, just pausing for a bit to see what is happening. We are hearing this out of Nashville. We are hearing it out of Houston. So
that would be something that might comfort individuals.
In the U.S., 70 percent of the U.S. economy comes from consumer spending. So, the economy can be up. But if Americans do not feel safe enough to
engage in the typical activity, social activity, economic activity, it is going to put a dampening effect on the overall economy.
So I think that whatever the government does or doesn't do, I think U.S. citizens overwhelmingly by the way, in every survey tells us that they are
cautious about going out again until they feel safe.
So I don't know what the overall government, the government in D.C., the administration can do. They have already told us that the economy is not
going to shut down. But U.S. consumers may do just that.
ASHER: So, just given overall the sharp rally in stock that we have seen over the past month or so --
KROSBY: Yes.
ASHER: I mean, after yesterday, after that dramatic drop yesterday, do you think that stocks at this point are going to tread a bit more carefully,
especially given the news out of a number of states in the south with the rise in cases and hospitalizations and that kind of thing -- is it going to
be a very different scenario with the markets going forward until there is a full reopening?
KROSBY: Well, at least initially, but I don't think so. I think, you know, once you get momentum back in the market -- for example, we start to see
Europe, you know, opening up and it already has started opening up without any problems.
We start to see China beginning to turn the corner in terms of growth. The U.S. economy is affected by that, but certainly, the market is affected by
that and we may start to see a bit of risk taking again.
You know, one thing that we say on the trading floor is buying begets buying and selling begets selling. So, once the buying begins again, which
it will, it will create its own momentum, but I do think at least initially, we are going to see a bit of caution in the market.
It is not going to go completely risk on until we get another catalyst, and that could come from the headlines regarding a vaccine, headlines regarding
a therapy or that we begin to see the virus contained going into remission for a bit of -- over the next couple of weeks.
ASHER: Yes, as you mentioned the market really needs genuine good news at this point. Quincy Krosby live there. Thank you so much. Appreciate it.
Have a great weekend.
And much like the U.S., European markets had a volatile week as well, it ended the day mixed clawing back some losses from Thursday. Let's take a
look here.
The Eurozone Industrial output fell 17 percent in April, the worst ever on record. It wasn't the only economic indicator to hit new lows. You can
actually see there, the mixed markets we saw in Europe.
But speaking of other economic data, the GDP out of the U.K. dropped by a record 20 percent in April, four sectors saw steep losses -- pubs,
education, health, and car sales as well.
But with the entire country on lockdown for the month of April, economic activity fell across the board. Anna Stewart joins us live now from London.
So, this number, 20 percent -- 20 percent drop just in April alone, it was actually even worse than expected, Anna. Just take us through the numbers.
ANNA STEWART, CNN REPORTER: Pretty bleak numbers as you can see there. And if you put this into context historically, the contraction just in April
was three times as bad as the contraction we had in the economy for 2008 and 2009 put together.
If you add the contraction to what we saw in March when lockdown began for the last two weeks of March, the economy in the U.K. has shrunk by nearly a
quarter in that time.
Speaking to economists today, they do expect this to be the very bottom of the economic hole. The big question is, given we can't really compare this
to any other recession, how quickly can the U.K. get out of this economic hole? How quickly do we see this recovery coming?
The biggest risk on the horizon at this stage is jobs. The risk of mass unemployment. Right now, over a quarter of the U.K. work force is on the
government's furlough scheme.
So, the government is paying 80 percent of those workers' salaries. Now, that's not going to continue for much longer. At the beginning of July,
companies will start to have to shoulder some of the costs, too.
Now, lots of reopening will be happening in the next few weeks. Some businesses will be able to reopen. Many will struggle though to get the
same sort of revenue levels that they are used to given all the new social distancing procedures, given a huge slump in demand.
I have been covering the opening of open markets and car showrooms. I can tell you, there is no demand there. Very few customers can be seen.
So, really, with the economic recovery, what we need to see is this unemployment kept under lid, but the furlough scheme has the taper off. So,
it is what kind of interventions will the government make and what will we see in the next few weeks and months? But it is incredibly worrying this
picture, and a V-shaped recovery looks unlikely -- Zain.
ASHER: Yes, we have been talking about that. Anna Stewart live for us there. Thank you so much.
It is easy to talk about these dire economic numbers in the abstract, but let's not forget they represent personal hardships across the U.K. Some
certainly more visible than others. Here is our Phil Black with more.
(BEGIN VIDEOTAPE)
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT (voice-over): Tourists don't come to Trafalgar Square anymore, but there are still crowds. The vast
space is now being used to feed the homeless while ensuring social distancing.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Come that way, please.
(END VIDEO CLIP)
BLACK (voice-over): Most of the people who stay on London's streets throughout the pandemic are long term rough sleepers. But the charity still
working here report a recent trend. There are many new faces. People suddenly homeless because of COVID-19.
There are the obvious economic causes. London's lockdown made lots of already insecure casual work quickly disappear, vulnerable families have
also splintered under the emotional strain of living through this pandemic.
Right up until lockdown, Collin Reynolds lived with his elderly parents.
(BEGIN VIDEO CLIP)
BLACK (on camera): What did they say to you?
COLLIN REYNOLDS, HOMELESS: They asked me to leave. So, I left because my parents are high risk, it wasn't a good idea for me to stay there. So I
left and come to London because there is more help here.
(END VIDEO CLIP)
BLACK (voice-over): Life for Collin and his family was never easy. He has a long history of crippling depression and anxiety. Now, the further
pressures of this crisis have torn him from support he desperately needs.
On Weymouth Beach along England's southern coast, there is now obvious sign, people in this community are struggling, but Andy Price knows the
truth.
His community cafe set up to help traumatized military veterans has quickly embraced a new purpose.
(BEGIN VIDEO CLIP)
ANDY PRICE, CO-DIRECTOR, THE VETERANS HUB: It would be like, pallets of -- passing pallets of the milk for the cereal there.
(END VIDEO CLIP)
BLACK (voice-over): He is feeding people. The isolated, the poor, the suddenly jobless, owners of what were recently thriving businesses. Anyone
who needs it, and the need is great.
As he hits homes across Weymouth, Andy knows many of those he now helps are bristle against the idea of receiving charity.
(BEGIN VIDEO CLIP)
PRICE: You think you kind of failed, yes, you're failing as a parent, you are failings an individual. Really, like we are kind of discovering that
one. You are only one paycheck away from needing support.
(END VIDEO CLIP)
BLACK (voice-over): Carrie Watts and her husband, Michael are grateful for Andy's help, but accepting it is hard.
(BEGIN VIDEO CLIP)
MICHAEL WATTS, MK CLASSICS: I should be earning and providing for my family. But I'm just not. I'm just sad doing nothing, pretty much, just out
here wondering if one day I am ever going to be able to go back to what I love doing and genuinely that upsets me.
(END VIDEO CLIP)
BLACK (voice-over): Soon after lockdown, people stopped ringing Michael to fix their cars and Carrie needed hospitalization for COVID-19. They almost
lost everything.
(BEGIN VIDEO CLIP)
CARRIE WATTS: Yes, it is what you can do, to see how long things can go maybe you just hit rock bottom.
(END VIDEO CLIP)
BLACK (voice-over): In the northern City of Sheffield, we find the same pain. People who just a few months ago had independent lives and plans for
the future, now patiently waiting in the rain for handouts.
Phil Barrett is a self-employed electrician.
(BEGIN VIDEO CLIP)
PHIL BARRETT, ELECTRICIAN: In the initial start of the lockdown, we were sending food up here for people. We never expected that we would be on the
receiving end of some of it towards the end of this.
(END VIDEO CLIP)
BLACK (voice-over): Back in Central London, Collin Reynolds walks back to his sleep spot in the entrance of one of the city's iconic theaters. He
don't know when he will sleep in a bed again, when or how he will see his parents.
(BEGIN VIDEO CLIP)
BLACK (on camera): Have you ever known a chapter of your life this uncertain before?
REYNOLDS: No, not this bad.
BLACK: One day at a time?
REYNOLDS: Yes, that's all I can do.
(END VIDEO CLIP)
BLACK (voice-over): COVID-19 has killed more than 40,000 people in the U.K. It has stolen the emotional and financial security of many more.
Phil Black, CNN, London.
(END VIDEOTAPE)
ASHER: Shopping malls have now reopened in two huge cities at the heart of Brazil's coronavirus pandemic. We will talk about the concerns that's
raising and more with the Secretary of Finance for Sao Paulo State. That's next.
(COMMERCIAL BREAK)
[15:17:57]
ASHER: Brazil has the second highest number of coronavirus cases in the world, and new infections are still surging. But its two biggest cities
have now reopened shopping malls attracting crowds willing to wait hours in line to get inside.
Brazil has recorded nearly 41,000 deaths, almost half of them in Sao Paulo and Rio de Janiero states. I am joined by Henrique Meirelles, the Sao Paulo
State Secretary of Finance and Planning. He is also a former Brazilian Finance Minister and former President of Brazil's Central Bank.
Mr. Meirelles, thank you for being with us. My question to you is how much does reopening now risk hurting the Sao Paulo economy and the Brazilian
economy in the long run just given the fact that the number of cases in the country is already so high?
HENRIQUE MEIRELLES, SAO PAULO STATE SECRETARY OF FINANCE AND PLANNING: Well, first, it is a pleasure to be here talking to you and to everyone who
is watching us.
The importance of what we have here is a sequence of factors. We had no information about the pandemic in the beginning of this process, obviously.
And then, the most prudent action was the full social distancing attitude which was taken, locking down most part of the commerce, of the street
corners, shopping centers, shopping malls, et cetera, et cetera, all over the state.
Evidently, that went already for a long period, and now, it's the moment when we have to reopen, but based on data, statistical data of
interactions, scientific data as well, evolution of curves, which one is the average for Brazil, number one.
[15:20:09]
MEIRELLES: Number two, what is happening in every area of the state? We are dividing these according to several key points. The number of new people
getting the virus, the number of persons getting to hospitals, to emergency rooms, regulators or respirators, whatever, and all of that is being taken
into consideration, then what we are going to do is not a full opening, far from it.
It is selective opening based on very specific protocols assigned with each of the economic sectors of the economy. This is gradual. In Sao Paulo, the
curve is expected to peak by the end of this month, early July, and then, it will start falling gradually as it happens.
People are getting more used to wearing the masks, to washing their hands constantly, et cetera. All of this with the very, very intense education
and pain, we will be gradually opening specific sectors in terms of industry, office, but with specific rules of social distancing, et cetera.
And that is important for the economy starting to reopen, and for the sustainability of the plan.
ASHER: Okay, listen, I completely understand that it is not a full-blown reopening and that you are targeting very specific areas and sectors and
you are educating the population on things like social distancing and hand washing as well. That's all well and good.
But in the U.S., there have been a number of cases in the south -- I am sure you've read about it, places like Florida, places like Texas, South
Carolina, that some people fear have reopened too soon and that has led to a rise in a number of cases in this country and also hospitalizations as
well.
Is there concern in Sao Paulo or in Brazil in general about the healthcare system becoming overwhelmed if there is a surge in the number of cases?
MEIRELLES: Well, number one, that's a critical point of decision. Exactly what you are mentioning. The number of people getting sick, the
availability of beds in the hospitals, equipment, et cetera, and that -- those are the key factors for gradual reopening in some specific areas when
we see the number of beds available compared with the number of people who are in need of using the emergency rooms, et cetera, et cetera. And the
sampling of new cases, and that is the driver, or those are the drivers.
We are compiling the data and then it is a gradual reopening in several areas. If for some reason that happens, which means in some areas the
number of people getting the virus goes up, the number of people using the hospital beds are going up, et cetera, then there is a pullback for that
specific area.
In summary, the plan is databased. The moment when there is something there which is going to the wrong direction, there is a reversion.
As I said, the key here is the sustainability of the plan for social, economic, and also medical reasons.
ASHER: All right, Brazil has certainly had an issue with testing, and that's been part of the problem in terms of accurately identifying how many
cases there are. But, Mr. Meirelles, we have to leave it there. Thank you so much for joining us on the program.
In neighboring Colombia, the pandemic has brought the country's income disparity to the forefront. Government forced evictions amid the health
crisis have left vulnerable workers in desperate straits. Stefano Pozzebon reports from Bogota.
[15:20:00]
(BEGIN VIDEOTAPE)
STEFANO POZZEBON, JOURNALIST (voice-over): Three months ago, Lilybeth Fori had a job and a house, but the pandemic took nearly everything away from
her.
Like almost half of the entire Colombian labor force, Lilybeth worked informally first as a caregiver in private homes and then as a street
vendor.
Lockdown measures against coronavirus meant she has seen no income since March and to make things worse, her house was bulldozed at the beginning of
May. The city says it was unsafe, but now she can't find a home.
She has no job and rental accommodations are sparse during the pandemic. Now she can only look at what remains of her house.
(BEGIN VIDEO CLIP)
LILYBETH FORI, INFORMER WORKER (through translator): Before the virus, we had a life. Now, we don't. We don't know what we are going to eat or what's
going to happen to us.
(END VIDEO CLIP)
POZZEBON (on camera): Colombia may have been spared the worst of the health crisis, but the economy is suffering. Unemployment almost doubled in
Colombian cities since the beginning of the lockdown and without a job, the people that are displaced from these areas are saying that they're facing
life on the streets.
POZZEBON (voice-over): Lilybeth and 60 other people now live in tents, an impromptu settlement just meters away from where their houses used to
stand.
Now the pandemic has only added to the frustration of people like Lilybeth who says she took to the streets in November last year to demand social
change.
It has also increased the disparity between those who can afford the quarantine and work from home and those who cannot. By one estimate, as
many as seven million Colombians could fall back below the poverty line by the end of the year, a level not seen since 2002.
Fabian Marroquin also took part in the protests last year, when he was working as a cook. Now unemployed, his home near Lilybeth also demolished,
he thinks a return to the streets is the only way for things to change for the better.
(BEGIN VIDEO CLIP)
FABIAN SERGIO MARROQUIN, INFORMAL WORKER (through translator): The government slogan is stay at home, but where should I stay if they took
away my home?
(END VIDEO CLIP)
POZZEBON: The Colombian government has so far pledged $74 million to prevent layoffs, but little of those resources are designed to help the
informal economy.
Colombia is now lifting some quarantine measures while still trying to control the virus. It's a thin line between the health crisis and the
economic collapse.
Stefano Pozzebon, CNN, Bogota.
(END VIDEOTAPE)
ASHER: Lebanon says its Central Bank will begin pumping U.S. dollars into the market Monday to bolster a faltering economy. Fiery anti-government
protests have erupted in the urban centers in of Beirut and Tripoli, a reaction to soaring food prices, businesses closures and mass layoffs.
CNN's Jomana Karadsheh joins us live now. So, Jomana, part of the issue is of that the Lebanese pound in terms of value has fallen off a cliff. Just
walk us through some of the measures the government is using to bolster the value of the currency?
JOMANA KARADSHEH, CNN INTERNATIONAL CORRESPONDENT: Well, Zain, we've heard today you know, after weeks of blame trading between different officials,
no one wanting to take full responsibility for the country's economic financial and currency crisis, following government emergency meetings
after those protests we saw on Thursday night.
The President coming out and saying that this is -- the government is going to share responsibility here with the Central Bank and also with the
country's banking sector, and they are now saying that as of Monday, they are going to start injecting U.S. dollars into the market in an attempt to
try and stop the Lebanese lira from tanking even further.
You know, over the past few months since October of last year, the lira has lost about 70 percent of its value, and this has had a stunning impact of
course on the country's economy.
It has had a devastating impact on people's lives. This is a country that relies, Zain, on imports. So, the price of basic commodities have
skyrocketed. People have not been able to afford some of the most basic of necessities.
This is at the same time as you've seen unemployment going up. So many layoffs, people basically are struggling to survive. This is why you are
seeing these protests.
What is different about the protests that we saw on Thursday night. Yes, we have had anti-government protests, anti-establishment protests in Lebanon
on and off since last October, but these are the most widespread in different cities.
As you mentioned from the north to the south, in the capital of Beirut and also diverse. For the first time in a very long time, and this is very
rare, we saw supporters of Hezbollah, this is the Shia working class, also taking part in these protests, some of these protests in their strongholds,
perhaps here a sign that Hezbollah, which backs the government is not objecting to these protests, they are allowing them to go ahead.
And it shows, Zain, the kind of anger and frustration that we have seen rising on the streets as people are fed up with the political elite, with
the ruling class and the governments that have come and gone and really not delivered anything.
So you hear these measure from the government. Is that going to be enough?
[15:30:06]
It doesn't seem like this is more than a temporary fix at this point. It's unclear if this will help stabilize the lira at all. We're going to have to
wait and see and for many people, they feel that this is too little too late thing.
ASHER: Yes, mismanagement and corruption, as you mentioned, is certainly something that population that has been fighting against for a long time
coming. Jomana Karadsheh live for us there. Thank you so much.
Starbucks is reversing a controversial policy after intense social media backlash. The company is now allowing employees to wear black lives matter
apparel, and it's not stopping there. That's next.
(COMMERCIAL BREAK)
ASHER: When I say nasty, that's more QUEST MEANS BUSINESS in a moment when Starbucks has backtracked on company policies surrounding the Black Lives
Matter movement and car rental car rental giant Hertz in bankruptcy. So why is the stock almost up 40 percent today? Before that, though, this is CNN,
and on this network, the facts always come first.
U.S. case of coronavirus are back on the rise in a number of states. Two of the country's largest states, Florida and Texas reported their highest
daily number of confirmed cases yet. Those and other areas have seen a resurgence in cases since reopening their economies a few weeks ago.
Several of London's monuments have been boarded up ahead of demonstrations planned for the next weekend. The statue of Britain's wartime Prime
Minister Winston Churchill was vandalized with the statement Churchill was a racist during last weekend's Black Lives Matter protests. And the head of
London police is warning counter protesters stay away after learning they may show up to try to protect the city's statues.
New York Governor Andrew Cuomo has signed a package of police reform bills into law. They ban the use of chokeholds by police officers criminalize
false race-based emergency calls and open access to disciplinary records for individual officers as well.
[15:35:22]
ASHER: Starbucks making a dramatic reversal the coffee giant now says not only will it allow staffers to wear Black Lives Matter apparel, but the
company is also making 200,000 t-shirts, supporting the movement. It comes after a social media backlash and a viral boycott Starbucks hashtag over
its prior stance that wearing Black Lives Matter tire would violate the company's dress code.
Johnny Taylor Jr. is president and CEO of the Society of Human Resource Management. He joins us live now. Johnny, thank you so much for being with
us. So this is the first time that Starbucks has been in the hot seat over masters when it comes to race. You'll remember that in 2018 there was that
whole issue when two black men walked into a Starbucks in Philadelphia and were actually asked to leave.
In fact, not only were they asked to leave, the police was called on them because the person behind the counter believe they were trespassing because
they hadn't ordered any coffees. So just tell us why it's taken Starbucks so long to come around just to really sort of understand sensitivity on
matters when it comes to racial bias.
JOHNNY TAYLOR JR., PRESIDENT AND CEO, SOCIETY OF HUMAN RESOURCE MANAGEMENT: Well, there's several things. First of all, racial bias matters are
complicated. The idea of person one just recently say, oh, these are -- this is not difficult to do. Well, it's on the contrary, they're very, very
difficult our country's history and in fact, global history suggests that matters of race and religion and politics even are very, very difficult to
sort.
Starbucks is practicing, they're trying to figure this out. And what was acceptable or good policy even five years ago, isn't so now. So, they
continue to try to sort it just as most important years in America and indeed around the globe are trying to sort what's right now.
ASHER: Know if they aren't getting it right.
TAYLOR: Yes. Well, so they won't know -- again, it's given what we know today. I think one thing that's for sure is that we should expect and I'm -
- by the way, no judgment on the decision to allow the Black Lives Matter apparel to be worn in the workplace. But then what we -- what that opens
the door is for people to wear other types of apparel in the workplace and then it opens the organization up for, frankly, discrimination claims.
You know, what happens when members of staff one aware Make America Great again, tariff paraphernalia? These are issues that we have got to and for
your audience that's, you know, associated with the Trump campaign. And so, these are issues that we -- if you open that door and ask for equal
treatment and equal to treatment goes both ways. So, this is going to be interesting. Many of us employers struggled with it are going to watch.
ASHER: Just in terms of going forward. Obviously, there is so much attention now on matters of race and equality in America because of the
Black Lives Matter protests. How do we make sure that yes, even though there does seem to be some positive change, that it's not just short lived,
that when things get back to normal, when the media focuses attention again on something else, when there's other breaking news stories, that this
still stays the norm that companies continue to show that they care about matters of equality and race?
TAYLOR: You know, the problem is, this is too easily a bad, right? And the reality is, it's a real issue, one that we are totally-- and especially as
an H.R. professional -- profession, we're focused on ensuring these conversations that have been sparked by the death -- unfortunate death --
tragic death of George Floyd, don't just go away at the end of his funeral and people forget and it's the new topic.
We're keeping them front and center and center in H.R., we're going to do much better. H.R. professionals and leading their organizations to be more
diverse that is to hire more diverse populations and then make them feel included? We forget that there's a D and an I. Bringing people into an
organization and not making them feel included is also a problem because then they leave just as quickly as they came.
So D and I diversity inclusion, as we call it, or some people say inclusion and diversity is going to be not just fleeting. It's part of the new
business imperative, and I hope and trust that you can keep this forefront people like you in the media, saying this is just when there is someone
being hurt by the police, that this is a topic that becomes part of our cultural norm.
ASHER: Right. Johnny Taylor, couldn't agree more. Thank you so much. Appreciate it. The U.S. has certainly a long way to go when it comes to
diversity and inclusion in the workplace in 2018, black professionals held just 3.3 percent of executives or senior roles at U.S. company. Last year,
more than one-third of companies (INAUDIBLE) 500 did not -- did not have a single black board member.
[15:40:05]
ASHER: Todd Walthall is Chief Operating Officer at Blue Shield of California and Chair of Blue Shield Operating Committee. He joins us live
now from California via Skype. Todd, thank you so much for being with us. So you had those dismal statistics, only 3.3 percent of all executive,
senior executives in this country are black. So you are a black person who has certainly succeeded in the corporate world in America yourself.
Just walk us through your personal experience when it comes to race in Corporate America and what was it that allowed you to succeed? And what was
it that fostered your growth?
It looks as though just -- can Todd actually hear me? We're going to have to come back to him. It looks as though -- it looks as though we don't have
Todd. We're having issues with his audio. We're going to try and get him after the break. All right. Standby for a two-minute break and we're back
after this.
(COMMERCIAL BREAK)
ASHER: Welcome back. We're following the market bounce back after Thursday's sharp selloff. U.S. Airlines are all up sharply. Take a look.
They've been among the hardest hit during the pandemic when travel came to a standstill. The number of travelers going through airports in the U.S. is
actually taking up. TSA reported more than a half million security screenings on Thursday.
Still certainly a lot lower than the almost three million people that are usually screened every single day in the United States. The rebound in
trouble numbers is good news for hurts. Shares in the car rental giant are surging on the bankrupt company's unusual plans to sell up to $1 billion in
new stock. Shares up more than 40 percent on the firm's last-ditch effort to raise capital even though the value of the stock could actually be wiped
out.
The company says it will warn potential buyers the stock could ultimately be worthless. Paul La Monica is joining us live now. So Paul, just
explained to us what are the advantages of a company like Hertz, which is in bankruptcy? What are the advantages to them raising money in this
particular way?
PAUL LA MONICA, CNN DIGITAL CORRESPONDENT: Yes. This is a very strange turn of events, Zain, but what Hertz is hoping to do is cash in on the fact that
there are so many people willing to buy shares of bankrupt companies and by doing a financing deal this way. Selling new stock issuing shares, you're
not taking on more debt, you have no money that you need to pay back to banks or other lenders because you're just raising cash through a stock
sale.
[10:45:11]
MONICA: So, if Hertz is able to pull this off, they have this money that now they don't have to return to a bank because they didn't actually get
this money through a loan. It's a straight up stock set.
ASHER: They've warned potential buyers less than the stock were in bankruptcy proceedings the stock could ultimately worth us. Why are people
still rushing to buy?
MONICA: It is very, very curious, Zain. You've seen with a lot of other bankrupt companies, JCPenney, Pier One, we've had these spikes in bankrupt
stocks and I think it's a testament to the short-term kind of day trading environment that seems to be back. A lot of people are really trying to
cash in on quick pops in the stock move, but make no mistake, this is a company like every other that is filing for bankruptcy.
You're going to get wiped out if the bankruptcy actually goes through as planned because the shareholders are last in line to get their money back.
It's all of the bondholders and other creditors that will receive some money through a bankruptcy reorganization. Even if you wind up having hurts
go public, again, like many companies that have gone public, you wind up with new shares. Existing shareholders are not guaranteed at all to get a
piece of the new stock.
So, it really is not something you want to hold on to for the long term. If you're going to be a day trader and trying a quick move, quick buck on
this, be my guest and good luck, but don't buy this thinking that, oh Hertz is going to reemerge as a healthier company. And I'll take advantage of
that. You're not going to benefit from that at all if you buy Hertz shares right now.
ASHER: So it's all part of this sort of speculative frenzy that we're seeing. So just talk to us about this rally that the Hertz shares have been
on over the past three weeks. On May 26th, the shares actually closed at just 56 cents. What has that journey been like up until now?
MONICA: Yes, it's been a fantastic ride for people that have been in Hertz. Stock went up to as much as about 550 earlier this week on some of this
unfound enthusiasm, it cratered yesterday along with the broader market. But even then, it's still only went back until like the $2.00 range and now
it's back hovering around $3.00. So, to be fair, anyone who did bottom pick and buy this, you know, just about a little over, you know, a half dollar.
You've had a pretty sizable return if you've held on to it until now.
But the question again is, why saying this is not a company that's going to be worth much once the bankruptcy goes through. Oh, and by the way, New
York Stock Exchange is trying to delete the company, Hertz is now, you know, appealing decision. So share still trading but you can add the stock
to listed before the bankruptcy even goes through.
ASHER: We'll see if that delisting occurs and when it occurs, right? Paul La Monica live for us there. Thank you so much. You are watching QUEST
MEANS BUSINESS. We'll have much more news after this quick break.
(COMMERCIAL BREAK)
ASHER: All right. Earlier in the show, we're actually talking about the racial makeup of corporate America and the lack of diversity in both the
boardroom and companies as a whole across the country. In fact, one startling statistic is the fact that only 3.3 percent, 3.3 percent of all
senior executives in the United States are black. Todd Walthall is one of them. He is Chief Operating Officer at Blue Shield of California and Chair
of Blue Shield Operating Committee. He joins us live now from California.
So good to have you with us. I'm so happy you can actually hear me this time. So as a senior, black executive yourself at a -- overwhelmingly white
company, what do you think the key ingredients were that allowed for your accept success? What allowed you to rise to the top?
TODD WALTHALL, CHIEF OPERATING OFFICER, BLUE SHIELD OF CALIFORNIA (via Skype): Oh, well, thanks for having me. And I'm glad you can hear me as
well. Well, so here's what I would say. As I look back at my career, not only a Blue Shield of California but before that. I think there were three
attributes that I would really want to share. It -- their risk, its resilience, and their sacrifice.
And from a risk standpoint, I was raised with the notion that as a black man in America, I was going to have to be twice as good get half the shot.
And so, when I started my career, I started taking on some pretty challenging assignments because I knew that was the way that I would get
recognized by the more senior executives, that essentially it opened the doors for me to keep my career progressing.
As I became a more senior executive, it was really about resilience. I started to walk into rooms more often than not, which kind of no one in
that room looked like me. As a matter of fact, there weren't a lot of people of color, and there weren't women either. There are a lot of white
men in that room. But that room was the key to future success. And I had to learn how to have my perspective heard and get my voice heard in that room.
And so that was about the resilience. And I think lastly, it was about sacrifice and not really a sacrifice on my side. It was a sacrifice that my
wife made. It was sacrifice my kids made where we moved corporately and I was able to build a collection of experiences that I knew would make me
more qualified for that next job, that bigger role. And so those are the three things that I would say kind of really have enabled me to be in the
seat talking to you today.
ASHER: OK. There's -- that was a lot to digest. But I did make notes. So one of the things you said that really piqued my interest is about that,
yes, you were oftentimes the only black face in in a room filled with white people. What do you think allowed you to A, feel comfortable in that
scenario because so many people of color don't? And second of all, what do you think gave you the confidence to make sure that your voice was heard?
Because it's not just about having a seat at the table, it's actually about allowing for your voice to be heard as well.
WALTALL: Yes, no, no, no. You absolutely have to learn to be effective at getting your voice heard. I think one of the things that helped me most, I
was the benefit of a lot of investment in training in terms of being an executive. Early in my career, I was tapped and I got to follow a senior
team. I got a chance to sit in a room as an observer. Watch the CEO of the company run the company from a governance and planning standpoint.
I got a chance to see how the board room work. And so, what I was able to bring to the room and have success, I understood the nuance in which you're
able to persuade folks and sell ideas and get traction behind.
ASHER: So going forward, obviously, there's so much attention and interest in the issue of diversity now, because of the Black Lives Matter movement.
My question to you is, in order to make sure there is change going forward and that is diversity, do you A, think that there should be legal quotas
when it comes to boardroom diversity, just in terms of women and minorities? Some countries have that, Norway has it with women especially.
And do you think companies across America should be publicly forced to report just how diverse their -- the racial makeup of their workforce
actually is? Would that be helpful or not? What are your thoughts?
WALTHALL: My thought is, I think that step can be helpful, but it's not enough in and of itself alone. I think there are two things that we
absolutely have to put a focus on in order to create durable solutions that really change the story 10 -- five, 10 years from now as we move ahead.
[15:55:13]
WALTHALL: One of them is sponsorship, the importance of sponsorship over mentorship will make all the difference in the world. And it's something
that every executive can do today, if you're an executive in Corporate America, you can find someone that doesn't look like you, doesn't think
like you, didn't grow up where you grew up, and give that person opportunities in the boardroom with senior leadership team.
And that, in turn, will change the course of their career. So that sponsorship is going to be important because without access, we won't see
improvements in the numbers. In addition to that, you have to start on the front line. I think early in your career. We have to develop programs,
especially around the front line that allow people to learn those leadership skills that they'll use for the rest of their career.
ASHER: All right. You summed it up pretty well. Todd Walthall, I wish I could talk to you for longer but we are running out of time. But you've got
five minutes left in the show. Todd, appreciate you being with us. Thank you so much.
And there are just moments left to trade on Wall Street. We'll have the final numbers and the closing bell right after this. You're watching CNN.
(COMMERCIAL BREAK)
ASHER: All right. There are just moments left to trade on Wall Street. Let's take a look and see how the Dow is doing here. So as you can see, the
Dow actually started the day with a strong rally. It was early this morning up about 670 points or so then it fell. Then it came roaring back then it
fell again and now it has come roaring back in the last hour of trade of about 300 points in just the last hour.
Yesterday, the Dow did fall sharply down about seven percent. It was actually the worst day on the Dow since March. I want to take a look at the
Dow components now specifically, Boeing is leading the Dow 30 right now, up more than six percent erasing its Thursday losses. You're seeing a lot of
green along the screen here, along with a lot -- a lot of other major airlines that are also in the green as well.
Stocks have certainly been on a rally as you can see. Only four stocks in the red band. That is, QUEST MEANS BUSINESS. Thank you so much for being
with us. I'm Zain ASher in New York. Richard will be back next week. The news continues right here on CNN.
(COMMERCIAL BREAK)
END
