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Quest Means Business
U.S. Markets Extend Selloff, NASDAQ Near Correction; Italy Blocks Export of AstraZeneca COVID-19 Vaccines to Australia; Oil Prices Surge as OPEC Extends Production Cuts. Aired 3-4p ET
Aired March 04, 2021 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:34]
RICHARD QUEST, CNN HOST: Pretty awful day on the markets. The Dow has been down and if you look at the numbers, pretty heavily down for all afternoon.
They're off the lows of the day, but it was off over 600 points. The NASDAQ for its part showing as a correction, in correction territory as the jargon
goes itself. Remember, it was down over two percent yesterday, now it's off another one percent, its worse time since October.
The markets and the reasons why: Jerome Powell, the Fed Chair can't stop the selling. He says he is not trying to surprise the market with rising
rates.
Europe blocks vaccine shipments to Australia as the fight with AstraZeneca boils over.
And Jay-Z sells to Jack Dorsey as Tidal joins forces with Square.
We are live in New York, of course on Thursday, it is March the 4th. I'm Richard Quest, and I mean business.
Good evening, it's becoming something of a trend when we meet at this time. Again, U.S. stocks are falling. It is the third day, and the result --
reason of today, comments from the Fed Chair, which failed to reassure investors.
Tech stocks bearing the brunt of the selling. They're the ones with the highest PEEs. They are the ones with the highest forward earnings on cash
basis. And so they are the ones that are affected by higher interest rates.
The S&P 500 and the NASDAQ are now negative for the year-to-date, and the NASDAQ is just about at a correction which is a fall of some 10 percent
from its recent highs.
It's the prospect of a speedy recovery, leading to inflation, which could prompt the Fed to raise rates. That's the way it goes. You have stimulus,
which leads to recovery, which leads to inflation, which leads to the Fed.
Now, the Fed, of course works on the basis of inflationary expectations, and when you look at that, Jerome Powell says the U.S. is still far from a
full recovery.
(BEGIN VIDEO CLIP)
JEROME POWELL, U.S. FEDERAL RESERVE CHAIR: As far as the -- you know, the rate liftoff guidance, it's pretty specific. And as I said, it will take
some time to get there.
If you think about it, it's -- you've got to have a very strong labor market and inflation performing in line with our -- it's a picture of an
economy that is all but fully recovered.
You know, it's so -- and you know, the sooner that happens, the better. But I would say realistically, that's going to take some time.
(END VIDEO CLIP)
QUEST: It could not be clearer than that. Sir Howard Lutnick is the CEO of Cantor-Fitzgerald Financial Services Company and joins me.
The Fed Chair could not be clearer when he says rates are not going up anytime soon. And I understand that maybe they might tick up in the bond
market. But this reaction in stocks is overdone surely?
HOWARD LUTNICK, CEO, CANTOR-FITZGERALD FINANCIAL SERVICES COMPANY: Well, look, he is definitely not raising rates in the short end of the curve,
there is no way the Fed is raising rates in the short end of the curve. The longer end of the curve, which is when people show their expectations, of
course, they're going to creep up.
But the world's interest rates are going to stay low, the world's central banks are going to keep them low. And I think low interest rates are here
for a really long time, Richard, a really long time.
QUEST: So then, explain why is the market having a tantrum?
LUTNICK: Well, I mean, come on? We are a few points off our highs coming out of the pandemic. I mean, this has been the most extraordinary equity
market you and I could ever have imagined.
So there's going to be some weakness. By definition, there's going to be some weakness, but it can't always be on your highs.
You've got massive stimulus coming. That'll give us a little bump. You've got you know -- Biden said -- President Biden said he's going to vaccinate
and have vaccines for everybody in the United States by the end of May, so that should give us a nice recovery in the summer.
And so you're going to have that little good things coming in two bulks, but basically, the stock market has got to take a breather. It has to take
a breather, and I think it's going to show some weakness for the coming couple of weeks.
QUEST: And that of course raises the question "buy on the dips," our old friend. If it's not inflationary expectations coming out the cupboard, it's
buy on the dips starting to rise.
[15:05:14]
LUTNICK: Yes, you can't -- you cannot think that inflation is coming in this market, you can't. The Central Banks of the world, I mean, you've
still got negative rates in Germany and in Europe. There is no rates in Italy. I mean, come on.
You really -- you can't worry about inflation. The Central Banks are not going to raise rates. They're borrowing -- the U.S. is going to borrow an
extra $2 trillion dollars next week. You've got to understand these Central Banks are going to keep rates low. That's why Powell said what he said.
It doesn't mean that the loan rates are going to creep up, you know, 10- year notes could get to one and a half, big deal, one and three quarters. Big deal.
Yes, that's a little move. But come on. That's not an inflation moves in our economy.
QUEST: So I want to talk about your SPACs as they say, your Special Purpose Acquisition Companies. You know, you've got several of them. The sole
purpose of these is to raise money, a blank check as they're known to acquire a business and then take it public.
It's an IPO without the IPO problems, and they've exploded in popularity. I see you've done a couple of them. You did one late last year to buy View,
you did another one to buy AI. Is this thing -- are you using individual SPACs for individual purchases? Or are you aiming to create a portfolio of
companies within a SPAC?
LUTNICK: No, no individual companies going public through SPAC. SPACs are really private equity for the public market, right? These are companies
that were raising money from private equity, and now the public can invest in those companies.
So the company, View, it's closing on Monday, which means it will no longer be called SPAC-CF SPAC II, right, it will be called View, and that's
closing on Monday, and that's a company that you go to view.com, it's really unbelievably cool.
The CEO talks to you from the window -- from the window -- and that becomes your screen. It's amazing.
And the AI, you know, these are cool companies, AI, which is CF III is a LIDAR company. In 2024, when it goes in your car, it'll prevent you from
hitting pedestrians. You fall asleep, you won't hit the tree, it'll hit the brakes, like God forbid the thing that happened with Tiger Woods
You know, so these are really interesting companies, but it is private equity in the form of a public company and that's really cool.
QUEST: I was just thinking about, you know, when I was having a cup of tea before we came on air, when it suddenly tweaked to me, the SPAC is the
mechanism by which those like me can play with the big boys in markets by putting money in.
LUTNICK: Exactly.
QUEST: Now, one quick final question because we don't get you very often. Give me your raw, unbridled view on what the whole GameStop business, the
whole Reddit business was all about? What do you make of it?
LUTNICK: The world of retail investors is here to stay. It's going to change things. There's going to be momentum players.
I thought it was amazing that it only took one day to set the whole thing back up again. I was very impressed with the way the world works.
But retail investors make a difference. SPACs allow retail investors to invest in private equity. This GameStop thing, yes, of course, it was sort
of wildly focused and wildly overblown. But this is a lesson for Wall Street.
The retail investor with the internet and their ability to trade on their phone is going to fundamentally change things and it is going to be
incredibly cool. That's what Tesla is.
Tesla is the same as GameStop. Bitcoin, the same as GameStop. These are assets that retail investors are getting behind, and they're sending these
values to the moon. Take notice of it. It is here to stay
QUEST: And your SPACs, we will follow closely as they say. Good to see you, as always. Thank you, sir.
Keep well and keep safe for you in the family. Appreciate it. Thank you.
LUTNICK: Great to see you, Richard. Great to see you.
QUEST: Now, to the E.U., well, it is vaccine protectionism. The E.U. has stopped AstraZeneca from sending some of its own COVID vaccines overseas.
It was done through Italy. Italy has blocked the shipment of a quarter of a million doses to Australia. It's the first time an E.U. member has used the
emergency powers it was granted to prevent vaccine exports.
The move escalates the E.U.'s contract dispute with AstraZeneca and could raise global tensions of countries securing their vaccines.
Melissa is with me from Paris. So this is how it goes as I understand it. AstraZeneca as it is required to apply for a license to export the vaccine
from Italy, and Italy said no and the E.U., the Commission, as it is obliged to, has confirmed that decision. Do we know why the Italians didn't
want it to go?
MELISSA BELL, CNN CORRESPONDENT: Well, we know that Mario Draghi ever since he became the Italian Prime Minister has been very clear, Richard, that his
main mission, his first priority, what he was going to do, first and foremost, was try and fix the country's COVID problems by trying to get the
vaccination roadmap that has been so slow in so many European countries, including in Italy, back on track.
That was his aim, and it was last month at the European Leaders Council that he said that Europe should be far stricter. So you're right, this
mechanism introduced at the end of January, what we've seen is since then, 174 applications for vaccinations to be exported, this is the first time
that an E.U. country has objected.
And the Italians have now explained why. First of all, the fact that vaccines are lacking in Italy, they say, also the size of the contract,
250,000 vaccines leaving Italy to head to another country when there were not enough vaccines for Italians was essentially what the Foreign Ministry
explained was behind their decision.
But it is perhaps no surprise that it has come from Italy, given Mario Draghi's determination to try and get on top of this.
QUEST: The problem is, though AstraZeneca will say hang on, you know, they are not your vaccines that you bought. There is a production quota, there
is a production list. New Zealand was further up in the list than the E.U. You will wait your turn and we've got problems with yours anyway.
BELL: That's right. But remember, Richard that also that has changed. Now remember, Europeans, the European Medicines Agency had first of all
announced that the AstraZeneca vaccine would become the third vaccine that could be delivered in the E.U., then the national agencies of so many E.U.
countries decided that it wasn't yet sufficiently clear that it could be efficient for over 65.
That advice has just changed in a number of different countries, Germany, Italy, France, Belgium, to name just a few, Richard, that have come back on
that idea and now want to deliver the AstraZeneca vaccine, of which they have so many doses. Because remember, this was the first contract signed by
the E.U. It was also one of the largest.
For the time being, what we've seen in countries like France with the delays in the Moderna and the Pfizer vaccines, older populations, those
that have the greatest priority, not able to get vaccinated so far because of that decision.
So of course, there is added pressure now on European countries to secure those doses of the vaccine that they can now deliver to older populations,
and I think that may have played a part as well.
So for the time being, those vaccines blocked and very interesting to see what will happen next clearly for AstraZeneca, who for the time being has
not commented on this, Richard. They've not reacted so far to the Italian decision.
But that row that we saw explode so spectacularly and in such an unseemly fashion at the end of January, just ratcheted it up another notch even as
Europe really tries to get as many doses of these vaccines as it can to finally get their vaccination programs back on track -- Richard.
QUEST: Melissa is in Paris. Melissa, thank you talking there about the German decision that AstraZeneca -- Germany is now saying that the vaccine
is appropriate for people of all ages, having said back in January that there wasn't enough data to support it giving to those over 65.
Well, you can tell that's why on Wednesday, the Chancellor Angela Merkel and the German state leaders have agreed to extend the nation's lockdown
until March the 28th, while gradually easing some restrictions.
And that vaccination effort is facing criticism for being too slow.
Our correspondent in Berlin is Fred Pleitgen. He is reporting now about that about-face -- the about-face on AstraZeneca jab, which ironically, now
people don't want to take.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Thomas Buchhammer just got his first dose of the AstraZeneca COVID vaccine,
himself a medical doctor, he says he has no sympathy for Germans who shun AstraZeneca vaccine.
THOMAS BUCHHAMMER, MEDICAL DOCTOR: People in Germany are just too spoiled. It just reminds me of children playing on a playground and complaining
about a candy and think thinking they deserve another candy because someone tells them it is better.
PLEITGEN (voice over): Germany's Vaccination Committee initially approved AstraZeneca's vaccine only for people 65 and younger, hurting public trust
and the product.
Those running this vaccination center in the State of Brandenburg, which administers both the Pfizer-BioNTech and the AstraZeneca vaccine tell us,
early on barely anyone wanted AstraZeneca, but that is now changing.
"People were reluctant to make appointments," he says, "Not many people wanted to get vaccinated with AstraZeneca."
And the spokesman for the Physicians Association says, "My impression and what the numbers tell us is that the acceptance of the AstraZeneca vaccine
is rising. We can see that with the bookings."
Germany's numbers are damning. According to CNN's calculation, only a little over a quarter of the AstraZeneca doses delivered to Germany so far
have actually been used.
Germany's Vaccine Committee has only now approved AstraZeneca for all age groups, a move the German Chancellor anticipating, as she was announcing an
extension of the country's pandemic lockdown measures.
[15:15:21]
PLEITGEN (voice over): "It will probably be the case that the expert panel on vaccine use, and we will happily follow here will approve AstraZeneca
for older age groups." All this in a country suffering from a severe lack of available vaccines.
Sibylle Katzenstein, a general practitioner in Berlin says she has been lobbying authorities to allow her to administer vaccine to some of her
patients with severe preexisting conditions.
SIBYLLE KATZENSTEIN, GENERAL PRACTITIONER: That would have been nice if I had at least 10 vaccines in my fridge. It would have -- it did cost me a
lot of time and frustration. And in the end, these people who need it, they didn't get vaccinated. So why don't they distribute AstraZeneca to doctors
and we vaccinate.
PLEITGEN (voice over): The German government now says it will allow GPs to administer vaccines, but only starting in late March as the German public
grows increasingly angry at what many view as a severely botched vaccine rollout.
Fred Pleitgen, CNN, Berlin.
(END VIDEOTAPE)
QUEST: And some breaking news to bring to you: another massive earthquake has rocked the South Pacific for the third time today. The latest is an 8.1
magnitude, it struck off the coast of New Zealand in the Kermadec Islands. A tsunami warning is in effect for nearby coastlines.
And hours before that, there was another huge quake near New Zealand's North Island. We will of course keep a watch on what's happening in there.
By the way, there have also been tsunami warnings even as far away as Hawaii. But one has to say, any tsunami, the worst to take place would of
course be many hours away.
Caution is the name of the game at OPEC, oil prices are rising on announcement from the cartel's virtual meeting. We'll have those stories
next.
(COMMERCIAL BREAK)
QUEST: Doing much better than stocks, the oil prices surging on OPEC's decision to extend most of its production cuts through April which is
interesting bearing in mind that things are going to be picking up in economies, and therefore the demand for oil is likely to go up.
[15:20:04]
QUEST: And I think that's what you're seeing here. They're not increasing supply. We know demand will probably increase as recovery and reopenings
take place, and you're going to see oil prices go up, four and a half percent, and four and a half percent -- and also, we've got the interest
rate play, which went on, of course, in terms of that. So lots going on.
Saudi Arabia's Energy Minister says uncertainty over the recovery calls for a cautious approach.
(BEGIN VIDEO CLIP)
ABDULAZIZ BIN SALMAN, SAUDI ENERGY MINISTER: The jury is still out. There are those who believe in this and there are those who -- when you have this
unpredictability and uncertainty, I think there are choices you could make. I belong to the score of being conservative and taking things in a more
precautionary way and I will believe it when I see it.
(END VIDEO CLIP)
QUEST: John Defterios is with us. Well, that was a very begrudging note on the recovery from the Minister, wasn't it? I will believe it when I see it.
You don't often get Ministers putting it in quite such blunt terms.
But what I find interesting is, what do you think, John is the driving force here? Is it the higher interest rates on yields? Or is it the
question of a recovery?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, this is the zero risk strategy by Saudi Arabia, Abdulaziz Bin Salman, the Minister of
Energy here, authoring this approach here, Richard, and they are suggesting we're not going to do anything until we're certain of the demand. He even
made reference to the lockdown in North Italy, in Lombardy.
So it's not about the interest rates, they're seeing the demand recovery, they're just not really certain is going to happen towards the end of the
second quarter of this year.
And this, Richard caught the market completely flatfooted. We saw a number of different analyst reports from Wall Street in the City of London
suggesting they would add back 1.5 million barrels a day. That was just two days ago. And then this morning that the Russians were really pushing for a
half a million barrels a day, wrong on both accounts.
So let's take a look at the tally today. What we are talking about, still very deep cuts, 6.85 million barrels a day by the OPEC 23. And then the
million that was added by Saudi Arabia in February and March, they said they will add it through April, and the quote from the Minister at the
press conference I was attending, "We're in no rush to come back here."
So what I also thought was fascinating today, no tension between Alexander Novak of Russia and the Minister of Energy from Saudi Arabia, because if
you bring up that one-year chart, remember last year, we had the conversation from Vienna when we saw that prices were at $51.00 a barrel,
they collapsed to $19.00 for North Sea Brent, they went negative for WTI.
And then cutting their production measures that took place through the end of April, Richard. They will be cutting in a severe way.
They started at nearly 10 million barrels a day, by the end of April, they will still be hovering near eight million barrels a day, but the strategy
that was made very clear by the Saudi Minister at the end of this was, look, we're like a Rapid Strike Force now. We don't have to wait four
months. We don't have to convene in Vienna. We don't have to have the backdoor meetings.
We go virtual. We make a decision, and they're going to meet again on April 1st. It's a different approach to the market, but don't respond too quickly
to the higher prices we see today.
QUEST: John, thank you. John Defterios in Abu Dhabi.
A COVID resurgence in some European nations is clouding prospects for economic recovery. Today, it was Hungary, which announced they will tighten
restrictions amid a spike in cases and the Czech Republic has done similar moves.
And of course, as you heard we mentioned earlier, Germany's extension of a months' long program to the end of March.
The lockdowns are prolonging the pain for European businesses. Insurance giant, Swiss Re has posted a net loss of $878 million last year, pressured
by pandemic related claims.
John Dacey is Swiss Re's Chief Financial Officer. He joins me from Zurich. Good to have you, sir.
We were just thinking, when we look at your $3.9 billion in claims to do with coronavirus pandemic, what are we talking about here? Is it business
interruption insurance? Is it loss of life insurance? Why are you -- what's the main component that's caused the losses because of coronavirus.
JOHN DACEY, CHIEF FINANCIAL OFFICER, SWISS RE: So, Richard, there are probably three big buckets that we can put most of the losses in. The first
one unfortunately is related to mortality. We've reserved approximately $1 billion dollars for paying life insurance claims to the survivors of people
that have passed away due to coronavirus.
In addition to the mortality losses, there have been large business interruption losses. The actual size of reported losses has been relatively
small, but we expect many more to be coming in the door and that's why we put up reserves related to about $1.4 billion for those potential losses
coming through
And then the third big bucket, Swiss Re, like a number of large insurance groups around the world give specific insurance covers for events and when
those events are canceled, we're responsible for paying out to the organizers of those events, the specific refunds, which allow them to cover
their costs, and those three represent the majority of the $3.9 billion.
QUEST: So, did you did you have to pay out on the Olympics bearing in mind they've been postponed? And if you have, I mean, you get it back next year,
I mean, the Olympics could have cost you a fortune.
DACEY: The Olympics could have cost us. We explained that we had a total exposure of $250 million at Swiss Re. We've paid a part of that, but our
strong hope, first for the athletes and second for the Japanese hosts there is that the Olympics will occur this coming summer.
And if they do, everything will go well, we've already made the payment for the people that have suffered directly because they did not occur in 2020
and then 2021, we move forward.
QUEST: Can I talk about your decarbonizing of the business? Sustainability reinsurance decarbonizing, when you say that, do you mean, firstly, the
investments that you will invest in as part of your own portfolios for the business, for the profits, or secondly, for that insurance risk that you
will undertake, that you will write?
In other words you won't write for carbon business?
DACEY: The answer is yes. So, on both counts, we've already made significant moves. In 2017, we set our investment portfolio to an ESG
benchmark. This actually served us very well since 2017 to date.
We've promised to go full carbon net neutral in 2050, but we've already taken the leading steps to be out there in front of the markets.
On the underwriting side, we've already moved away from ensuring thermal coal, ensuring the most polluting dimensions of oil and gas, making sure
that we don't provide insurance for speculative carbon-based activities, especially in environmental areas that are much more fragile in the context
of tar sands, in the context of Arctic drilling, and we'll continue to do that to be completely net neutral by 2050 in the underwriting portfolio
also.
QUEST: That is fascinating. Grateful, sir. Thank you for joining us.
DACEY: Pleasure.
QUEST: Certainly for explaining to me where the pandemic losses are, which of course once you put it like that becomes so clear. Thank you, sir.
As we continue tonight on QUEST MEANS BUSINESS, the big screen is back in the Big Apple. New York City is reopening its movie theaters for the first
time in nearly a year.
The CEO of AMC, he is ready, he is prepared, now he just needs the popcorn. After the break.
(COMMERCIAL BREAK)
[15:30:00]
QUEST: Hello, I'm Richard Quest. A lot more QUEST MEANS BUSINESS still to come.
I'll be speaking to AMC's chief executive about reopening the movie theaters and getting swept up in the Reddit retail trading frenzy which did
them quite a bit of good on their debt. He'll explain.
And after a disastrous 2020, cruise ship operators are reporting pent-up demand for a return to the seas -- the CEO of Hurtigruten.
Before all of it, this is CNN. And here, the news always comes first.
Parts of New Zealand's North Island and parts of the South Pacific are under a tsunami warning at the moment after a massive earthquake. It was
8.1 magnitude and it struck near the Kermadec Islands. Hours earlier, another powerful quake hit the area and that triggered a tsunami warning
too.
The Pacific tsunami warning center says other Pacific islands including American Samoa and Vanuatu could see waves -- and there are watchers as far
as Hawaii.
The U.N. Human Rights chief says security forces in Myanmar have killed at least 54 people since the coup on February the 1st.
He's calling on the country's military rules to halt their crackdown on peaceful protest and immediately release hundreds of people who have been
arbitrarily detained.
Pope Francis is set to arrive in Iraq on Friday despite a surge in COVID-19 cases and heightened violence. The Pope's visit will be limited to a
handful of small gatherings and sites linked to the bible.
The Vatican's calling the trip an act of love. Francis will be the first pope to visit Iraq.
From cheese to cashmere, the United States is suspending tariffs on certain British products. It's a sign of trade tensions easing after a Trump era
dispute over subsidies between Boeing and Airbus.
The suspension is to last four months as both sides work out a long-term agreement.
A rough day on the U.S. market. Look at the triple stack and all three are down.
The Dow is off its lows of the day. We're now down only 340 -- only -- 349, but under 31,000 as you can see on the number.
The Nasdaq's held itself. It was down two and-a-half or nearly three at one -- percent at one point but that has now pulled back.
It was sparked by the Fed Chair's comments on inflation; investors continuing to move away from tech stocks.
Entertainment shares today lower. AMC's off more than six percent, nearly 7 percent.
Wild swings over the past -- look at that. Wild swings well above the broader market as retail investors piled in and then piled out, off you see
it, now you don't.
Wild year indeed. With enough drama to fill a big screen production.
The Reddit rally provided an unexpected twist as day traders triggered a big short squeeze, AMC theaters sat empty thanks to government-mandated
closures.
It suffered some HBO Max pain after the service owned by CNN's parent company said it would release new films straight to filming. And now the
prospect of a happy ending.
I love New York. Theaters are to reopen in one of the biggest markets, New York City.
Adam Aron is the chief executive. He joins me from Leeward (ph), Kansas via Skype. It is so good to see you, sir.
ADAM ARON, CEO, AMC: You too.
QUEST: First of all -- go ahead. ARON: (Inaudible) to be with you.
QUEST: Congratulations --
ARON: It's always goo to be with you.
QUEST: -- on the opening in New York.
[15:35:00]
I remember the day when you said to me at the beginning of the pandemic, Richard, I have to understand that your costs are still there and there's
not a penny of revenue coming in.
Now, you've had revenue since August in some shape or form, not much. But now New York (inaudible). So tell me how the company's looking?
ARON: So, thank you, Richard. And you've ridden this pandemic with us all the way. No one would have thought that the world would have suffered a
repeat of the Spanish Flu Epidemic of 1919, but here we are.
And yes, we went from being the largest movie theater in the world -- largest movie theater chain in the world with $5.5 million of annual
revenues -- to literally overnight we shut and had no revenues at all.
We shut almost 1,000 theaters in 15 countries on three continents. It's been a long, tough road.
The theaters in New York never reopened from that March of 2020 closure until tomorrow. In New York City we've been shut for fifty and-a-half
weeks.
But tomorrow's a very big day. We're reopening 13 theaters in New York City tomorrow. We are the largest movie theater chain in New York City.
We're also opening up -- reopening, I should say, in San Francisco. San Francisco's one of those markets where we opened then we shut, now we're
reopening again. We're opening up a brand-new theater in Denver.
So as you sit here tomorrow night, almost 90 percent (ph) of our theaters in the United States are going to be open. And that's very good news for
us.
One of the most important markets still to come is Los Angeles. We hope we can get Los Angeles open two, three or four weeks from now.
QUEST: How did you take advantage of the whole Reddit GameStop business? You were able to pay down debt, your share price went all over the place
but you were able to gain some advantage. Explain how.
ARON: Well, the irony is that we raised more than $2 billion of cash between April and January. And 99 percent of that cash was raised before
this Reddit phenomenon. We were able to pay down some debt in January.
But my focus has really been running the business and not running the share price. There have been so many challenges for us to raise the cash that we
needed to stay afloat waiting to get to the other side of this pandemic, working with major studios to get films released again -- working with our
landlords to be patient on the rents that we owed them.
And maybe, most important of all, when you think about what would get us out of this pandemic, it was two things.
It was number one, being able to open our theaters safely and cleanly. And we partnered with Harvard University's prestigious School of Public Health
to come up with a whole series of safety protocols that we have put into place as our single highest priority to take care of the health and safety
of our guests and our employees.
And from there we needed vaccinations. I was on the phone two days ago with albert Bourla, the CEO of Pfizer, and I told him that he was the most
important man in the movie theater business.
Because if it weren't for Pfizer and Moderna and the other vaccine makers we might have had a very unhappy ending to this story.
But vaccinations are moving briskly now in the United States. They're starting to happen in Europe in numbers. That is what we believe --
QUEST: So --
ARON: -- will be the salvation of our industry.
QUEST: Now you need product. And obviously product is slowly coming through because -- as the Hollywood and movie industry makes again.
Do you see -- I obviously have to -- my parent company, Warner Media -- you're being critical obviously of the decision that movies should go
straight to streaming at the same time as in theaters. Do you hope they change their mind on that?
ARON: I do. And we have been successful in dealing with other studios to change what might be called a traditional window pattern of our industry.
For your readers -- your listeners who don't know what that is. The window is when it's at theaters exclusively -- I'm optimistic we'll find a
compromise that works for Warner and works for AMC. We've been business partners for 100 years, I think our business relationship will be bright
going forward.
But you are right, we do need new movies. All but four major movies since March of 2020 were delayed till 2021 or sold off to streaming services.
[15:40:00]
Happily for us, most of them have been delayed until 2021. And now the deluge is going to start.
QUEST: Right.
ARON: Disney has "Riley" coming out tomorrow, Sony just moved "Peter Rabbit" up earlier into May. Universal has "F9" coming Memorial Day
weekend.
I am so looking forward to Tom Cruise in "Top Gun Maverick," Paramount's new movie that's coming out the 5th of July weekend.
QUEST: Right.
ARON: I really do think you're going to see a lot of movie titles in the second half of 2021.
QUEST: Thank you, sir. Great to have you on the program. We've talked several times over the pandemic. It is so lovely to be able to talk to you
when there is good news to report.
I live in New York, I'm looking forward to contributing some revenues to you. I might even -- I might even stretch to the popcorn.
ARON: Nothing like popcorn, butter and salt. Very healthy for you, very healthy.
QUEST: Thank you. Good to see. Thank you for joining us.
Now, from the big screen to the high seas. The cruise industry is embracing new horizons.
We'll talk to the CEO of Hurtigruten who joins us next. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
0356
QUEST: Cruise lines say vacancies for the next two years are already starting to sell out. Travelers are now looking to life after COVID-19 and
cruising is extremely popular.
To help to meet some of the demand, Royal Caribbean has announced its first fully vaccinated cruises will set off from Israel later this year.
More than 82,000 people have taken cruises to nowhere from Singapore, no ports of call and that means less risk of new COVID infections.
Norway's Hurtigruten is also optimistic. Now it's only got two ships along the coast of late last year. And the company says pre-bookings for next
year is up 44 percent, compared with the same timeframe last year.
The cruise lines announced its coastal sailings for next year and beyond to meet demand.
Daniel Skjeldam is the CEO of Hurtigruten Cruises. He joins me from Oslo.
Before we go any further, just clear up what happened last year. I know -- we'll get to your future settings in a minute.
I know that there's an investigation on the Zeedrumve (ph) cruise where supposedly it was meant to prove the validity and actually did the
opposite. Have you got to the bottom of it yet?
[15:45:00]
DANIEL SKJELDAM, GROUP CEO, HURTIGRUTEN: That was -- good to see you, Richard. Let's jump straight into it.
I think that was another company you're referring to, but you're absolutely right.
We also had a cruise in July last year where we, unfortunately, had COVID on board the ship, as many other cruise lines unfortunately have had.
But we believe that the procedural changes that we do based on this enables us to kick start operations again even more safely than before.
QUEST: You're right. There were two incidents last year and I was conflating the two when I shouldn't.
When we look, though, at what you have learned from your own and from other incidents, what then can you say you're going to do differently?
Do you see, for instance, is the future for the cruise industry all vaccinated cruise lines?
SKJELDAM: I think that is one of the directions we really need to investigate. And for ourselves, we are considering demanding vaccines on
our expedition ships.
Even more important, I looked all the incidents that they've seen on cruise ships over the last years is because of the movement of travel of crews
that needs to change from a certain frequency, which has made it difficult.
And that is also what we're learning on our incident in July last year. That if the crew changes, that makes it extra, extra hard.
So vaccinating also crew members on the ships will make it a lot more safe for the guests.
But vaccinations is crucial to get the industry up and moving again and to ensure the safety of the guest and not the least to let them feel safe when
they're traveling again.
QUEST: You're the largest expedition cruise line in the world. And I do wonder, when do you -- I know this is how long is a piece of string -- but
when do you think you will be back to where you were?
SKJELDAM: We actually are very, very optimistic about the future. It's a few trend we see happening out of COVID that will drive growth for us.
And, as you mentioned in your introduction, 2022 looks very, very good. We're way ahead of same time in 2020 in all of our markets and we believe
there is a massive amount of pent-up demand.
People are not used to sitting at home being restricted their movement of travel. People want to breathe.
And we think that our industry, expedition cruise lines offering unique experiences, will be one of the beneficiaries when travel starts to move
again and when people take their first holiday in a long time.
And it also seems --
QUEST: So --
SKJELDAM: -- that the wholesale savings are up in all the markets. So people want to splurge when they start to travel again.
QUEST: That is the irony, isn't it? Those who manage to save, those who didn't -- unfortunately, those who didn't lose their job are doing well in
that sense of not having -- of having disposable income.
Finally, what do you want? Your chance to talk to tourism officials who, in my view, have done a fairly dreadful job in terms of coordinating policies
during the pandemic -- for understandable reasons.
But as we look to the recovery, what do you want from tourism officials worldwide to help foster a recovery?
SKJELDAM: First of all, we think a vaccine passport will be crucial in order for the likes of us, border officials and guests to be able to travel
freely and safely and be welcome.
And it will also be a tool for the travel authorities to make their communities feel safe as travel starts again. So I think that is number one
on my wish list -- of course, after all the different nations being able to offer vaccines to their population.
But also we hope to see some changes that will last after the COVID period. Sustainability, demand more sustainability efforts from operators, avoid
overcrowding.
This is a chance to actually kick start something new and good after a frikking (ph) miserable year with COVID, that could lead to something good
in the long-term.
QUEST: I like the way you said "could." I'm not sure it will, but we will. We travel in hope, sir. We travel in hope more than expectation.
Daniel from Hurtigruten, it's good to have you, sir. We'll talk more once your ships are fully up and running again and you're cruising around. Thank
you, sir.
In a moment from Twitter to Tidal. The star-studded streaming service; a surprise new boss, Jack Dorsey.
Now why does Jack Dorsey, Square and Twitter, why does he want a streaming service? He answered that, by the way, in his own tweet.
In a moment.
(COMMERCIAL BREAK)
[15:50:00]
0231
QUEST: As Jay-Z put it, "Money ain't a thing." Methinks he protesteth too much when we're talking about a $300 million deal.
The rapper's agreed to sell a majority stake in his music streaming platform, Tidal, to Jack Dorsey's mobile payment company Square. Jay-Z will
join Square's board of directors.
Brian Stelter has more.
So he asked the question, why should -- in his tweet -- he asked why should a payments company buy a streaming service?
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: Right.
QUEST: Were you satisfied with his answer?
STELTER: No. This deal makes no sense. That's why it's so interesting. This is failed streaming service.
Years ago Tidal could have become this alternative to Spotify and Apple Music. It was viewed as the artist -friendly service that would go ahead
and bring in Jay-Z's famous friends and provide music you can't find anywhere else.
But that vision failed. Tidal has been out there kind of not doing much of anything for a couple of years. And now they've found a way to cash out
through Jack Dorsey and Square.
But the vision is very, very unclear. Maybe they have something up their sleeve we can't imagine yet --
QUEST: Oh, Brian.
STELTER: -- but so far it makes no sense.
QUEST: Brian, Jack Dorsey says he wants to make it the streaming service for the artists. He wants to integrate all those bits of Square that people
-- that enable the gig economy for me to pay somebody just by using that little gadget. He says that's what he wants to do.
STELTER: But is that worth $300 million? We know for months Jay-Z and Jack Dorsey have been hanging out. They've been seen together in Hawaii and
elsewhere.
I thought Peter Kafka at Vox said it very well. This looks like a deal where Jack Dorsey just paid a lot of money from his publicly traded company
to a company owned by a guy that he likes to hang out with.
friends forever, and that's sweet -- but maybe there is more to this.
QUEST: Right.
STELTER: Maybe Jay-Z is going to come in and help Square. Maybe he's going to bring new ideas to the company. But the notion they need to buy Tidal,
buy a music streaming service, in order to make it easier to buy T-shirts at a concert, that part just doesn't add up.
Look, these are two titans of industry, however, and it's sometimes hard to bet against Jack Dorsey and against Jay-Z.
So I'm not claiming here this is going to go up in smoke --
QUEST: Right.
STELTER: -- maybe there's something real here. But so far it doesn't add up.
QUEST: Brian, let's celebrate tonight that the movie theaters open in New York. Which --
STELTER: I actually really want to go. Do you want to go see a movie?
QUEST: Yes.
STELTER: I'm free tonight or tomorrow.
[15:55:00]
QUEST: They open tomorrow here in New York. I was going to say I'll buy the popcorn.
It's good news, though, isn't it?
STELTER: Bring my mask.
QUEST: Oh, yes. Several of them. It's a small development but it's an important one, isn't it?
STELTER: It is, really is. I agree. I'm excited, (inaudible).
QUEST: Good to see you. Brian Stelter, thank you.
The markets, I need to -- I don't know why I'm playing with the mask now.
The markets, let me show you where we stand as we go towards the closing bell.
We have recovered slightly off the lows of 600 points down. Still down one and a quarter. All the major markets are down.
The Nasdaq has borne the brunt of today, down over two percent on top of a two percent yesterday. So the Nasdaq's off about 11 percent since its high.
But keep in mind what Howard Lutkin said, this is froth off the top.
"Profitable Moment" next.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment".
It's tempting to believe it's all over but just look tonight.
Hungary is back in lockdown or lockdown measures, same with the Czech Republic. Germany has extended its lockdown until the 28th although some
things are being eased. And the U.K. still remains pretty much locked down.
At the same time, movie theatres in New York are opening tomorrow. Texas, it's all off, everything's open and doing business. And one wonders where
you go with that.
Because, at the end of the day, why should the U.S. be able to open up but Germany not? Why should New York have movie theaters but London is still
closed? This is the anomalies within the whole system of COVID.
But it does mean even if I go to the movie theater over the weekend, which I think I want to do, not only to give AMC a bit of revenue, but also to
remind myself that life is moving -- perhaps too slowly for some -- but it's moving back to a bit of normality. One bit at a time.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in New York. I'm afraid it is a down day on the markets, the markets are down across the board.
But remember what Howard Lutkin says, look, think of where interest rates are actually going. They're not going up anytime soon.
Whatever you're up to in the hours ahead, I hope it's profitable.
THE LEAD is next.
END
