Return to Transcripts main page

Quest Means Business

Novak Djokovic's Visa Problems May Keep Him From Tournament; South Africa Says It Has Passed Fourth Wave; U.S. Hotel Industry Eyes 2023 Recovery; Sony Set To Launch Electric Vehicle Subsidiary; Riots Rock Kazakhstan; Boris Johnson Scrapping Pre-Arrival Testing Requirement. Aired 3-4p ET

Aired January 05, 2022 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[15:00:16]

RICHARD QUEST, CNN INTERNATIONAL ANCHOR: So the New Year is underway and around the day, investors are taking in the last month's Fed Minutes and

also geopolitical issues and add in whatever is happening in terms of omicron, and I mean, just look at that market. That is literally an about

turn on the back of the minutes from the Fed.

The markets and the main events of the day. COVID-era travelers who are weary face small changes. Britain is scrapping pre-flight COVID tests,

which is good for the travelers, but Hong Kong is banning flights from eight countries, which is the opposite.

A double fault for the world's number one, Djokovic faces problems at the Australian border over his vaccines status, as South Africa looks to

restart its economy after omicron, the country's top CEO is with me in this hour.

We are together, and I'm live in New York, January the 5th, I'm Richard Quest and I mean business.

And breaking news with Kazakhstan's President has issued an urgent request for help from a regional military alliance. He wants to put down a growing

unrest. The country is under a nationwide state of emergency after sharp fuel prices increases sparked violent protests.

[VIDEO CLIP PLAYS]

QUEST: You see the level of this unrest. The Interior Ministry says protesters set fires, threw rocks, sticks, Molotov cocktails, and they

stormed public buildings in Almaty and several other cities.

The President says that the airport there has been taken over by what he's calling terrorists. In the chaos, the country's Prime Minister and Cabinet

members have resigned. International diplomatic editor, Nic Robertson is in Moscow with the details.

So, this call for regional alliance assistance. What does that mean?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: This means the situation is getting more serious. The Collective Security Treaty

Organization is a collective of former Soviet states, the principal partner for Kazakhstan at this time of calling for help and the largest player in

that CSTO as it is known is Russia.

So essentially, the Kazakh President is calling on Russia for outside help. This is a clear indication of how desperate the situation is on the ground.

The images we've seen this evening of protesters still in control of many streets, of a tidy up operation in some places where military vehicles are

being clearly seen smashed and broken on the streets.

It is very unclear what the national picture is because the internet has been turned off for much of the day, and when -- and I think this is a clue

to what's happening here, a big clue as to how the Kazakh leadership is playing the situation is that the President is saying that these protesters

on the street who have come out to protest against the hike in fuel prices are in fact, he is calling them terrorists and is going beyond that.

He is saying that they've had training outside the country and that this is essentially an outside sponsored intervention. He is offering no proof of

that, no evidence of that. But it does seem to speak to the situation that he finds himself in, as you say, the Prime Minister has resigned. There was

a replacement, the government stepped down.

He, the President has now taken on more security powers, but the actual picture of the possibility or lack of stability across the whole country is

very, very hard to ascertain right now -- Richard.

QUEST: Yes, but Nic, for many decades, of course, Kazakhstan, under President Nazarbayev. He goes in 2019, essentially puts in his own

replacement. What in the volatile cocktail -- what changed over the last 24 months? Because remember, Nazarbayev left under protest himself in 2019. So

what's now ramped it up?

ROBERTSON: So Nazarbayev has still maintained a huge amount of influence within the country, particularly within the security infrastructure, which

many in the population are afraid of, for example his nephew was the Deputy Chief of the National Security Council in the country.

[15:05:06]

ROBERTSON: He himself retained a significant security oversight portfolio, and part of what the demonstrators today have been calling for is for his

removal. He was very powerful, and for a very long time, as you say, and he did organize his replacement.

But what has happened is that over the past year or so, the government has been trying to sort of get his -- has been trying to reduce fuel subsidies.

The country, as you know, produces so much oil. It is rich in oil, yet what it has been doing has been selling some of those oil products, liquid

petroleum gas to the many, many people in Kazakhstan who drive cars fueled by LPG, and a lot of them. It's a very high number of percentage-wise 80 to

90 percent in some parts of the country that use LPG.

So the government essentially had been selling it below market rate, less than what it was producing it at. It was -- it let the price rise to a

natural market level at the beginning of the year, which sent the prices way high, more than doubled what people have been paying, and that is what

sparked the protests right there.

That's been rescinded now.

QUEST: Is it like --this is asking you how long is the piece of string? Is it likely that President Putin will respond in the traditional Soviet/early

Russian way, offering fraternal support to a neighbor, in other words, send in some troops to help him out?

ROBERTSON: What we've heard from the Foreign Ministry spokeswoman today say that they hope that this could be resolved peacefully, that they hope the

situation would be returned to normal. And of course, there was concern in Russia, because this is a brotherly nation.

So in that context, certainly Kazakhstan looked upon as part of that fraternity. The Kremlin spokesman had earlier said that it was important

that there was no outside interference.

We've now heard the Kazakh President saying, actually, there had been. Again, no evidence of that. But what the Kremlin spokesman also said was

that the Kremlin believes that the Kazakhs can sort this one out for themselves, that they should be able to do this alone.

This will be a test of what the Kremlin's early assessment was, the likelihood is that Russia is not going to want to stand by and see

Kazakhstan turn into a chaotic situation.

How much -- how long the protests can continue, and what they can achieve in coming days and weeks is unclear, because it doesn't seem that there is

an organized leadership, which obviously belies what the President has been saying about the situation. But there hasn't been so far in the three days

of protest, a clear leadership emerge.

It has been a sort of more vigorous demonstration from a massive number of people, their anger, the status quo within the country. Russia -- I think

we can expect Russia to do everything it can to help the Kazakh President.

QUEST: Nic Robertson in Moscow who will watch closely. Thank you, sir.

Now to our main story that we were talking about. Travel is becoming more difficult in some places and easier in others. It is the omicron effect

spreading around the globe.

For instance, Hong Kong has banned flights from the U.S. the U.K. and six other countries to prevent a major COVID outbreak. France has expanded its

Red List. The U.S. was added to this list, which means unvaccinated Americans have to isolate for 10 days.

Australia has tight entry rules, which typically require full vaccination and testing. The tennis superstar, Novak Djokovic has found himself in

limbo at Melbourne's Airport. Over that, we'll get to that in a moment.

In England, it is scrapping its requirements for pre-departure testing. The British Prime Minister telling Parliament, the rule is bad for business,

and anyway, no longer keeps anyone safe.

(BEGIN VIDEO CLIP)

BORIS JOHNSON, BRITISH PRIME MINISTER: When the omicron variant was first identified, we rightly introduced travel restrictions to slow its arrival

in our country. But now omicron is so prevalent, these measures are having a limited impact on the growth in cases while continuing to pose

significant costs to our travel industry.

So I can announce it in England from 4:00 AM on Friday, we will be scrapping the pre-departure test, which discourages me from traveling for

fear of being trapped overseas and incurring significant extra expense.

(END VIDEO CLIP)

QUEST: Scott McLean is with us. I mean, I've done enough of those pre- departure tests for the U.K. First, it was antigen -- it was originally a PCR, but now, an antigen, and it was all rather -- it was rather

straightforward, but this is welcome news for travelers.

SCOTT MCLEAN, CNN CORRESPONDENT: Yes, absolutely. They sort of -- things were on a much different track if you go back to fall of last year and then

all of a sudden with the omicron variant, suddenly we got a resurgence of closed borders and you went from having to do the pre-departure test, which

had been long gone, suddenly returned and the antigen tests that you could do on arrival turned to PCR.

[15:10:18]

MCLEAN: Well, now they're going backwards. And so now, the pre-departure test no longer required and that PCR test is now turning into one of these

lateral flow tests, which previously were quite easy to find across the country.

This also eliminates the need, Richard, for you to quarantine until you actually got your PCR test back. It usually took it a day or two unless you

went to a much more expensive provider.

QUEST: Can I just clarify one thing if possible? The Prime Minister was talking about England, which of course is not the -- but you have the

devolved nations of Scotland, Northern Ireland, and Wales, but de facto -- if you're flying and unless you're going into Edinburgh, Glasgow, or

Belfast. I mean, if you're going to Heathrow and then getting a plane -- a train up to those other places, you're pretty much covered by the England

rules, correct?

MCLEAN: Gets into the weeds. Honestly, Richard, you know, Scotland has sort of largely followed what is happening with England, especially when it

comes to border questions.

One of the recent things that came up was for asymptomatic people and whether or not they needed to confirm their lateral flow test with a PCR

test. England made that move saying, look, if you're -- if you've taken one of these lateral flows and it's positive, treat it as positive. There is no

need to take a PCR test.

Scotland has now also followed suit saying, hey, if you've tested positive on one of these, there's nothing else for you to do. So, it gets into the

weeds, certainly, Richard and there are a lot of gray areas.

The other thing is when you take these lateral flow tests, a lot of people are not going to register them with the government in the first place. And

so the reality is by switching -- getting rid of that need for the PCR test, that will probably artificially bring down the official number of

cases though, of course, as we know, they're likely to continue to rise.

QUEST: And you elegantly point out, the tremendous difficulties that people still face in doing all that.

Scott McLean in London. Thank you, sir.

Now, on the other side, as the U.K. or actually to be precise, it is England, but we know about Scotland, Wales, and Northern Ireland. As that

gets a bit easier, others get harder.

Paula Hancocks is on how Hong Kong is reacting to the threat posed by omicron.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: It is the very definition of a zero COVID policy after identifying a single untraceable case of the

omicron variant, Hong Kong is now increasing its restrictions even further.

On Wednesday, the Chief Executive, Carrie Lam said that they have also identified several traceable cases of omicron and that they believed that a

fifth wave was imminent.

Now from Friday, 6:00 PM, there will be many entertainment venues which will be forced to close and also they will be ending indoor dining for at

least a week. The policy will be reviewed after seven days.

Now, this is also affecting flights. All incoming commercial flights from eight countries will be banned from January 8th for two weeks, at least.

Now, these countries are the United States, the United Kingdom, Australia, Canada, France, India, Pakistan, and the Philippines.

Now, pre-COVID, Hong Kong was considered a significant transport hub in the region. Authorities though have said that their priority at this point is

to open the border with Mainland China as opposed to the rest of the world. But they have acknowledged that that has now been put on hold as well as

they did discover their first omicron case last week.

Up until that point though, they hadn't had a single local transmission case in almost three months. Meanwhile, there is currently a cruise ship

docked in Hong Kong port and more than 3,000 passengers and crew on board are being tested and are unable to leave. That is after nine passengers got

on board and were then discovered to be close contacts of a preliminary positive case. All nine have so far tested negative.

Now this means that everybody on board now has to be tested. This is one of Royal Caribbean's cruises to nowhere, one of those cruises where they just

sail around the South China Sea and then go back to a port in Hong Kong. It has proven very popular in a city with some of the toughest border controls

on Earth.

Paula Hancocks, CNN, Seoul.

(END VIDEOTAPE)

QUEST: With me now is Emma Wade-Smith. She is the new British Trade Commissioner for North America and the Consul General and joins me now.

Good to talk to you. Thank you.

And first of all, congratulations on taking up the new post. Your predecessor was a firm favorite on this program and we hope you will become

one, too.

[15:15:10]

QUEST: Let's just deal with COVID and the restrictions and the new things. We have a lot of other things to talk about, but I want to get rid of this.

You may just heard my conversation with Scott McLean, and don't worry, I'm not going to ask you for the definitive answer on that.

But it is good news. Look, I've just been Googling. I have no idea. If you're going to Scotland via London Heathrow, I have no idea what the

official position is, but that's another story for another day. More important, it is good news that the pre-departure test has gone.

EMMA WADE-SMITH, BRITISH TRADE COMMISSIONER FOR NORTH AMERICA AND THE CONSUL GENERAL: I agree, Richard. Firstly, it's great to see you again, and

I look forward to being a regular guest on your show. It is, of course, really welcome news, not just for businesses, you know, the thousands of

businesses, and the hundreds of thousands of people who work for businesses in the U.K., the U.S., and Canada, but also for families.

And if you recall, a couple of months ago, being at JFK Airport, as we welcomed in those first transatlantic flights, you know, that was a

wonderful heartwarming moment for people. And at the end of the day, you know, business is done by people and it is a great thing for today to hear

that.

QUEST: So let's talk about the new rules that have just come in the U.K. for takeovers, the investment, new investment rules. Complicated rules,

which basically say that certain 17 areas of the economy have to know -- if you're doing a transaction concerning them. I think they're every -- some

of them are obvious -- AI, advanced robotics, defense, even communications -- but the government, the U.K. government now has a right to interfere.

WADE-SMITH: Well, this is a big overhaul of our National Security intent, and I think it sends a really clear message about our commitment to making

sure that, you know, U.K.'s National Security and economic interests remain at the heart of the decisions that we take as a government.

What we have done with this new law is to, as you say, introduce an ability for the government to look at areas that are particularly sensitive, where

we think that there could be matters of national interest that we want to take into consideration.

But for the vast majority of investments that come in from around the world into the United Kingdom, they will continue to be able to flow as they do -

- as they did on the third of January, with this new law coming in on the fourth. But it does give us those extra ability to protect our National

Security interests, and actually are very much in line with the extent to which the U.S. government provides the ability to.

QUEST: I guess, we're now a year after Brexit, so to speak, and you're getting a real view on what people, what companies, what CEOs think. Your

main job essentially is, as Trade Commissioner for the U.K.-North America, are you finding companies still bedeviled, still deciding is it worth

making that investment in the U.K. rather than in any E.U. nation?

WADE-SMITH: Well, actually, we're finding a really strong pipeline of interest, a continued amount. I mean, we already see huge volumes of

investment in both directions between the U.K. and the U.S., U.K. and Canada, and vice versa.

And so we're continuing to see some really impressive flows of direct investment into the U.K. right across the country as part of the U.K.

government's leveling up agenda. And that pipeline is still very vibrant, still very robust.

And in fact, some of the most recent data coming out whether it's from Canada or the U.S. or indeed the U.K., really demonstrates that continued

confidence and enthusiasm for companies to be investing in the U.K.

And it is no surprise because the government has made a lot of effort to create the right environments for that.

QUEST: Now, I was just looking online, Antony Phillipson, your predecessor, he was in post for years. So, if we now take you for the next four years to

say let's be generous 2026-2027. Do you think that you can -- that the U.K. can get a free trade agreement with either Canada or the United States by

the time you leave office?

WADE-SMITH: That is a big question, Richard. And of course one that is front and center of my mind, certainly, as I take up this role. Of course,

U.K. already has a free trade agreement with Canada and we're very much looking forward to starting negotiations on a fresh agreement between the

U.K. and Canada in the coming months. Both of us are gearing up to enter into these negotiations.

Of course, we've also got CP-TPP of which Canada is a member and has been very supportive of the U.K.'s request to become a member of that free trade

organization.

[15:20:12]

WADE-SMITH: And of course, the big question is around the U.S. and we do remain committed to entering -- re-entering the negotiations with U.K. and

the U.S. on trade agreements, not least because we think that it can really help to cement the high standards that we see across intellectual property

and services and labor, and food standards, and we think that it can help to generate more trade and investment flows.

But it's not the be all and end all. So it does remain an important goal for me personally, as Trade Commissioner for this region, but while we're

waiting for that to happen, there are all sorts of other things that we're doing to really try to invigorate drive more trading investment flows

between our two countries, really build on what is already the largest bilateral trade and investment relationship in the world.

And so that is around marketplace issues of which of course, we've had some successes in the last few months.

QUEST: Commissioner, thank you. We will talk more.

Next time, we'll do it over a cup of tea somewhere where we can be face-to- face when this omicron peskiness is out of the way, we can talk face-to- face. Good to see you. Thank you, ma'am for joining us.

On QUEST MEANS BUSINESS, coming troubled waters, smooth sailing, the climate has changed for some stocks two years into the pandemic in 2022, in

a moment.

(COMMERCIAL BREAK)

QUEST: And Wall Street. Well just look at it. Look at the Dow. It turned lower. In fact, we don't often see this. Look at that. It literally turned

turtle and there's a simple reason. The Central Bank according to the latest minutes is growing more keen to end stimulus.

So the Dow was doing less than an hour before the close and we are off sharply, very sharply in a sense, and we've been seeing a rotation based on

changes within the pandemic.

Shares on Zoom and Peloton, they were the favorites. Now look at them, and they saw a decline over the last year and the travel related shares like

American Airlines and Carnival have been gaining over the past few weeks after two challenging years.

You can see the opposite there now and they've now come back up again.

Seth Bernstein is the Chief Executive of AllianceBernstein. He joins me from New York. Before we get to what we should do, Seth, I mean, the Fed

has not popped the balloon. But it has certainly taken air out of it this afternoon by suggesting that in the latest minutes that the monetary

accommodation is going to be removed faster than previously thought.

In other words, they're going to switch to attention to fighting inflation. This is not good news for investors in the short run.

[15:25:31]

SETH BERNSTEIN, CHIEF EXECUTIVE, ALLIANCEBERNSTEIN: No, it's not good news in the short run, but it can't be a surprise to the market that the Fed was

growing increasingly concerned about the rate of inflation, particularly wage inflation.

So yes, it's quite a reaction, but you don't see it quite as pronounced in the fixed income markets that you have in the equity markets. So, I'm not

overly concerned about the short term blip. But yes, they are certainly taking away the punchbowl.

QUEST: Right. And the market was already highly volatile, as a result of omicron. Do you think we are now facing some form of correction? Arguably,

among some stocks, it's already there. Some higher flyers are down 20 to 30, even 40 percent, but, you know, in terms of a market broad range, what

do you think the Fed will stomach before pausing 15 percent? Ten percent?

BERNSTEIN: I don't think they would ever admit they had a particular threshold for pain. They're really going to look at how the money markets

are working to see if there's particular stress there.

Look, you know very well that this rally, and it's an incredibly powerful one has been very narrow, and you know, the S&P is up, I think, as of

yearend was up over a hundred percent over the past three years, but it was incredibly concentrated. And so we are seeing a rotation, whether this time

it will hold, hopefully it will and you'll see a broader breadth of stocks begin to recognize some of the real value. We continue to see real value

here. We just don't want to be terribly concentrated in equities at this point, just given my overall levels.

QUEST: Now, when you say this, because we've got viewers, myself included, who say when he says we don't want to be concentrated in equities, what

does that mean to the viewer who looks at you and says, well, Seth has got billions across all the various funds this, that and the other, but what do

I do with my pension fund when I see this coming?

Do I make any changes? Or do I just sit quietly and watch?

BERNSTEIN: Look, when I say overly concentrated, and I'm talking about breadth within your equity exposure. The average individual has no

alternative. I don't have any real alternative other than equities long term.

And so we think they have to remain invested. We don't have a crystal ball. They don't either.

We would -- on balance -- be a little less aggressive in equities than we were, you know, six, nine months ago. But the fact of the matter is, we

remain fully invested and we still think there is value to be had there, and so my advice to people is to stay on path.

QUEST: And the -- we had -- we've had a few guests over the last few weeks who have said the normal threat, the normal thing that people do in these,

you know, buy the dips. But obviously, if you've done that over the last five years, I mean, with the exception of you know, the '19 and '20 blip of

COVID, you'd have done very well.

There is a view now that caution, buying the dips is not necessarily -- you're going to be far more selective on which dip you buy, and how deep

the dip is before you buy.

BERNSTEIN: I agree with that, and I think people do have rules of thumb, whether it's 20 percent, 25 percent, but look, you've had such a disparate

market in terms of its performance. There are lots of stocks that are nowhere near their 52-week highs. And so you might be a little more

aggressive with those than ones that were, if this rotation continues to persist.

But yes, I think that rule of thumb remains a reasonable one. But I certainly think being more selective and I think frankly, being active at

this point in the cycle probably makes more sense for most people.

QUEST: Good to see you. Seth, thank you. We have a long 12 months ahead and I do hope we can call upon you throughout the year to guide us where we're

going.

BERNSTEIN: I'm happy to do it. Thank you for having me.

QUEST: Thank you, sir. Now, coming up. It is QUEST MEANS BUSINESS.

South Africa says it may have passed the peak of the surge. The CEO of Investec about how the country's economy might respond.

QUEST MEANS BUSINESS. Good evening to you.

(COMMERCIAL BREAK)

[15:30:08]

QUEST (voice-over): I'm Richard Quest with more QUEST MEANS BUSINESS in just a moment.

South Africa appears to have passed the peak of its latest virus wave. We'll look at the epidemic impact of that.

And charging up the electric vehicles and all the talk at the CES, the Consumer Electronics Show in Las Vegas. Putting it all together, this is

CNN and here, the news always comes first.

(MUSIC PLAYING)

QUEST (voice-over): The president of Kazakhstan is asking for help from a military alliance of post-Soviet states, including Russia and Belarus, it's

calling demonstrators protesting against the surging fuel prices a terrorist threat. There's obviously no evidence. The country's prime

minister and the government have resigned amid the protests.

England is lifting its predeparture testing requirement for vaccinated visitors. It starts this week. The British prime minister Boris Johnson

says the measure is no longer necessary and only served as an impediment to travel. The prime minister also reiterated his government didn't believe

another shutdown would be needed.

A day before the United States marks one year since the Capitol insurrection. U.S. attorney general Merrick Garland has pledge to hold all

perpetrators accountable. A short time ago he said the Justice Department remained committed to defending American democracy from threats of

violence. So far authorities have arrested more than 700 people in connection with the attack.

Organizers of the Grammy Awards have postponed the event, they say holding the show on the 31st of January simply contains too many risks. The major

music awards will now be rescheduled.

(MUSIC PLAYING)

QUEST: Novak Djokovic's part in the Australian Open has hit a new roadblock.

[15:35:00]

QUEST: One day after he was granted a controversial exemption from the tournament's vaccine mandate, the latest report is he's now being held at

Melbourne airport over concern with his entry documents.

(WORLD SPORT)

QUEST: The worst of Omicron may be over for South Africa's most industrialized economy. The government says South Africa may have passed

the peak of the fourth wave.

If graphs tell the tale, then that would appear to be the case. Restrictions are slowly being lifted and some countries are easing travel

bans. As you know, the United States has done so. There's concern that South African economy's still at risk of stalling.

Fani Titi is the CEO of Investec.

Always good to see you, sir.

How difficult has it been for Investec during Omicron?

FANI TITI, CEO, INVESTEC: Richard, compliments of the new year. The new variant was quite virulent in that it spread quite rapidly throughout the

country. And there was a fear that it would paralyze the economy as such.

But it became clear that the symptoms were quite mild, that hospitalizations were not increasing as expected and, in fact, the patients

that were on ventilators were at very low levels, compared to the last three waves.

[15:40:00]

TITI: So as a consequence of this evidence over the last four, five weeks, the country is beginning to relax some of their restrictions. In fact, just

before new year, the curfew that has been in place overnight was relaxed and, in effect, eliminated. The country remains on a level 1 lockdown.

QUEST: So from Investec's point of view, what are you looking for this year?

We have just been hearing from Alliance Bernstein, you've seen the Fed's results, it's going to tighten faster. So we know there's volatility in

this environment.

What do you do?

TITI: Look, we have to be agile as an organization and navigate whatever the environment we have to operate in.

I think the outlook is that the potential for a significant whiplash from COVID and the consequent lockdowns seem to be decreasing. So we hope to see

more opening of the economy and, as a consequence, more activity.

We do expect that central banks across the world will increase interest rates. We see inflation being a big concern on the horizon and central

banks have to act.

But as a bank, this type of environment is actually quite positive for us. We remain very close to our customers and clients and, in South Africa

specifically, we would hope that we would see a better environment in terms of the ease of doing business, would see better stability in terms of

electricity generation and electricity supply, because with that particular issue, you can't have an economy that grows.

QUEST: That is really the point in South Africa, isn't it now?

When you're talking about -- forgive the bluntness but talking about basic things like keeping the power on and keeping the lights on so companies can

stay open, should we be more optimistic for South Africa this year?

TITI: I would be more optimistic on the basis that some of the key issues that bedeviled the economy, like what we call state capture, which is an

acronym for deep-rooted corruption, institutionalized corruption, we think that has been dealt with. We've just seen the reports of the commission on

state capture.

We've seen a reopening of bids into the generation of power, particularly renewable energy, and we have been urging government to ease the load on

businesses as such.

So I think there are signs of optimism. And if the expectation that Omicron will not be severe while we learn to live with it and economic activity

increases, I think we will be in a good space.

QUEST: And we will talk to you, sir, as the year progresses to find out what's happening. I'm grateful. Thank you.

Coming up, it is QUEST MEANS BUSINESS. The Hard Rock Cafe is rolling with the times. The chairman of Hard Rock International, the strategies for the

year ahead.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

[15:45:00]

(MUSIC PLAYING)

QUEST: Welcome back, QUEST MEANS BUSINESS.

Some hotel owners think the lodging business may not return to normal until 2023 at least. A survey of 130 industry leaders in the U.S. found most

hotel owners won't return to pre-pandemic levels until 2023. One hospitality chain knows those challenges too well.

It's the Hard Rock International, it's the world famous brand of restaurants, casinos and hotels, operates in over 70 countries, you see

them there, along with the cafes, which all adds to the Hard Rock name. Wherever it is in the world, hotels and casinos. Jim Allen is the chair of

Hard Rock International, joins me now from the headquarters in Florida.

Jim, obviously, Omicron sent everybody back scurrying and now I guess you have to rethink a plan for the rest of this year.

What are you -- how do you do that?

What do you do?

JIM ALLEN, CHAIR, HARD ROCK INTERNATIONAL: First of all, Richard, thanks for having us. Happy new year to everyone.

It really depends upon the geographic region. To give an example, business is absolutely booming in Florida. It's really not having any effect

whatsoever, other than, frankly, you know, employees dealing with the virus on an individual basis.

But last night we were notified in Ottawa, in Canada, that we need to close for 21 days, our casino project there. So New York City, still very, very

challenged. Internationally, certain parts of Europe, OK; other parts going back down into a lockdown mindset. So each geographic region is unique.

QUEST: So taking the fact that Omicron and COVID will do as it wishes and you have to respond and, to a certain extent, be proactive but what's your

strategy this year?

Obviously, New York is still a big hope for a casino and you've just done the deal in Vegas and obviously want to expand.

But how would you describe that philosophy?

ALLEN: I think, from the pandemic standpoint, we just continue to move forward, focus on the safety of our employees and guests.

But as far as a business standpoint, 100 percent the brand is in a very proactive mindset of moving forward and expanding.

Obviously, you know, entering into a relationship for close to 80 acres on the Las Vegas Strip, literally on the 50 yard line, probably not a better

parcel of land in Las Vegas, that's something very exciting for us over the next three to four years.

If we're fortunate enough to be selected in the downstate, you know, process in New York, that would be another huge home run.

Very, very excited we got to the finish line in Barcelona, in Athens and now Mexico City. So, you know, three gateway international cities; now

those deals are completed, certainly looking forward to opening Vegas and very hopeful in New York City.

QUEST: Right and, internationally, I mean, obviously the core gambling area, I mean Macao, for example and the like, they just are proving to be

extremely challenging. And I'm wondering, for a Hard Rock International, do you switch?

Do you put more precedence for domestic U.S. than international?

ALLEN: Well, certainly, if the right opportunity came up in Macao, we would be very interested. I think one of the things that we bring to a market

like Macao is that we are in partnerships all around the world for many, many years.

And ironically, we were actually in Macao at one time, but really only as a hotel brand. So, yes, we would be interested. But on the flip side, we're

very, very enthusiastic about Japan, whether it be Hokkaido or Tokyo. So we're in it for the long run there.

[15:50:00]

ALLEN: Our first Hard Rock Cafe opened in 1983 and we think that's a great opportunity as we move forward.

QUEST: Enough of that, you're aging me, I remember it, enough, enough already. Listen, OK, good to see you, Jim, I wish you and yours all the

best for the new year. Thank you, sir.

ALLEN: Thanks, Richard, always a pleasure.

QUEST: 1983, good Lord. Think I was just finishing law school then.

From self driving vehicles to electric pickups, care companies unveil new concepts at the Vegas trade show in a moment. 1983, ay yi yi.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

QUEST: Consumer electronics show in Las Vegas this week and electric vehicle announcements been a big surprise. Sony says it will launch a

subsidiary for electric vehicles this week. Chrysler meanwhile has announced its line that will become entirely electric by 2028. Paul La

Monica is with me now.

We know EVs are big but why are they bigger this year?

PAUL LA MONICA, CNNMONEY DIGITAL CORRESPONDENT: Well, I think that, just in general, investors obviously have rewarded companies like Tesla, upstarts

such as Rivian and Lucid as well as even GM and Ford.

So if you're a company like Sony or Chrysler, whose parent is Stellantis, you've got to be thinking, hey, this is where the money is going, this is

where consumers are heading and this is what Wall Street likes.

So why not?

In the case of Sony, it's obviously a bit of a gamble to see whether or not people who like playing PlayStations will also want to drive a potentially

Sony branded electric car.

QUEST: OK, but we see those numbers, see how markets are down, other car companies are down quite sharply with the market. And I'm guessing, I'm

trying to sort of understand where it goes.

LA MONICA: Yes, I mean, Sony has just put out a prototype at CES. This is no guarantee that the company will ever actually mass produce a vehicle.

And if they do, will they need to partner with a legacy automaker in order to do so?

That remains to be seen. Chrysler does seem like they are more serious about going all electric with that brand. But what I think will be more

important, Chrysler is a shell of its former self as a brand.

[15:55:00]

LA MONICA: It's not really an important one as much for the parent company of Stellantis anymore. You do have to wonder, at some point, do Jeep and

Dodge eventually go all electric as well in the same way that Chrysler is doing?

As those two brands in particular are far more important to Stellantis going forward, than Chrysler.

QUEST: CES, I mean it's going ahead and it's sort of and some are and some aren't. It's difficult, isn't it?

LA MONICA: It is. I mean, I know CNN is covering it virtually, so I can't imagine there's a lot of enthusiasm to be in Las Vegas right now, sadly.

QUEST: Paul La Monica, thank you, sir, for joining us.

I want to show you what's going on with the markets. Bear in mind those Fed minutes came out and the market went down dramatically. The selling has

just -- I mean, there's no rhyme or reason, other than higher interest rates are on the way. We'll talk about it after the "Profitable Moment" in

a moment.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

QUEST: Tonight's "Profitable Moment," markets trade on rumor, gossip and fear; also, of course, a hefty element of greed. And today we're seeing the

reaction to what happened when the Fed basically told us what we already knew, that they will raise interest rates and probably will be raising them

faster than previously thought to combat inflation.

But that means the punch bowl is being taken away from the party and investors don't like that. The market is off sharply and likely will remain

that way. There will be great volatility over the next 2-3 weeks. That's not a great forecast from a guru but simply a statement of the obvious.

And through all this, you and me have to decide what we will do. Some will do nothing, others will buy on the dips and some will just wait and see to

see exactly how this comes out in the future.

But what it does mean is, of course, if inflation is higher and the Fed is dealing with it, it means economies are fundamentally strong, that we are

getting back to business, that things are moving forward. It's just going to be a really difficult few weeks ahead. That's all we can promise.

New Year's started. Well, (INAUDIBLE). And that's QUEST MEANS BUSINESS for tonight, I'm Richard Quest in New York. Whatever you're up to in the hours

ahead, if you look at the market, I doubt it will be profitable if you're long.

Oh, look at that, worst of the day, off 1 percent and some tech starts will be even greater. See you tomorrow when we do it again. "THE LEAD WITH JAKE

TAPPER."

END