Return to Transcripts main page

Quest Means Business

Markets Rally After Fed's Bostic Predicts Three To Four Rate Hikes; Authorities Seize $3.6 Billion In Bitcoin, Arrest New York Couple; U.K. Prime Minister Boris Johnson Responds After Another Party Photo Emerges; DHL To Spend $15 Million On Boston Dynamics Robots; Coffee Prices Hit 10- Year Highs; Olympic Figure Skating Ceremony Delayed After Positive Drug Test. Aired 3-4p ET

Aired February 09, 2022 - 15:00   ET

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

[15:00:13]

RICHARD QUEST, CNN BUSINESS ANCHOR: Take a look at the markets and we've got a bit of a bounce back going on, more than a bit actually, and what is

interesting, I want you to note there is not just the gains, but the solid gain it stayed that way throughout the course of the day.

Nearly one percent, the triple stack would show that all the others are similarly just having a good day as well. Those are the markets. There is

much to talk about today.

A member of the F.O.M.C. joins us today. Loretta Mester is with us to discuss what is happening next.

The cybercrime: More than $3 billion is stolen in currency.

And how your extra coffee price might just go a little bit more.

We're live from New York on Wednesday, February the 9th, I am Richard Quest and I mean business.

Good evening, tonight, as pressure grows on the Federal Reserve to tame inflation. Raphael Bostic of the Atlanta Fed said he supports three or four

rate hikes this year. The markets have been expecting the bank to add more aggressively. Stocks are rallying, lower interest rates are generally

better for the stock market.

Most investors were pricing in five or six hikes this year. It comes as more banks and economists call for interest rates to climb higher and to go

further, faster.

A few moments ago, the White House said it would not be surprised if tomorrow's U.S. inflation reading goes above seven percent I'll be joined

by the head of the Cleveland Fed in just a moment.

Paul La Monica is with me here. Paul, this battle that the Fed is doing at the moment. We know they're going to raise rates. The inflation number is

not just over target, it is absurdly over target. So the debate now is not if it is when and it's how much.

PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, and it's not even when. I mean, the Fed is going to raise rates in March, Richard, that is something

that I can safely guarantee you. You can have you back on the show and I will do something extremely silly and absurd if the Fed does not raise

rates next month. That is how confident I am.

It's a matter of whether or not they raise rates by a quarter of a point or a half percentage point, and then how much more will the Fed be

aggressively boosting rates for the rest of this year, despite what Raphael Bostic said about three or four rate hikes, being comfortable with that,

there still is a sense on Wall Street that the Fed may raise rates potentially as many as six times this year, and a lot of it is going to

depend on what happens with inflation, that CPI number tomorrow, very important.

Richard, it's not going to show a major deceleration in some of those pricing pressures just yet, but if we start to slowly, gradually get a

decline in the rise of inflation to more normalized three to four percent levels, then the Fed probably doesn't need to be as aggressive with rate

hikes, and I think that's one of the reasons why the market is rallying so much today. They are hopeful that maybe CPI cooled off of it and that they

can raise rates a little more slowly.

QUEST: Right. But we are also seeing earnings numbers, and a lot of what the market is doing is reflective of these numbers. Why? What is happening

in earnings that also feeds in? Because the worry had been that earnings were going to -- profits were going to take a hit because of supply chain

issues as well as inflation.

LA MONICA: Yes, and I think we are seeing, Richard, that some companies are still facing significant problems due to supply chain concerns, but

what investors have also learned from this earnings season is that you can't really paint everything with a broad brush.

There are company specific issues at play here, and that is why for example, Apple and Amazon and Google owner, Alphabet, they all had

fantastic quarters and even though they are part of the quote-unquote "FAANGs," you had Facebook and Netflix not doing nearly as well. So

investors are learning that you can't really look even at a sector by sector basis. Every company is unique, it faces individual challenges and

we'll find out with Disney tonight, for example, their earnings is coming up to the close.

[15:05:06]

We know that Netflix had subscriber growth issues that doesn't necessarily mean that Disney will as well; they could, but that's not necessarily just

because Netflix is having problems.

QUEST: Finally, Paul, the rates are coming. We don't know how much. Is anybody out there fearful that the Fed is going -- at the moment, it looks

like it is taking the foot off the accelerator, is it stepping on the brake?

LA MONICA: I mean, considering that the Fed has not even raised interest rates once again, I think it's premature to talk about whether or not they

are going to be stepping there -- you know, stepping off the brake too soon or not being aggressive enough.

What we know right now, Richard, is that a rate hike is coming in March and even though the market hates to hear that the Fed is data dependent, that's

the reality right now. What Raphael Bostic and Jerome Powell, and Loretta Mester, who you're going to be talking to, all of these people are going to

be continuing to look at the same inflation numbers that the rest of us are, and that is what will basically help them decide if they need to keep

raising rates more aggressively as 2022 progresses, or if they can finally step off of the talk of rate hikes meeting to be as much and prominent as

everyone expects them to be.

So I think, there are hopes that the Fed will follow the data and won't make any mistakes.

QUEST: Follow the data, don't make any mistakes, and allow me -- thank you, Paul La Monica -- allow me to introduce you to a way in which we are

going to follow this very closely.

Over the next several months, as rate hikes come in and we get more data, this is what we will be using. We start over here, which of course is the

reality. This is what the F.O.M.C. actually does.

So at the moment, of course, no rate hikes, this remains empty. Then we go to the dot-plot. .We expect the dot-plot will show three -- well, we know

the dot-plot shows three rate hikes this year alone. .It shows where the Committee believes and thinks interest rates are headed. So this gives us

an indication of what might happen here.

But now, you've got the private economists, and over here, you have Goldman Sachs. Now, Goldman Sachs is marginally more cautious in what it says. It

says it is predicting five rate hikes over this from the Fed. Move a bit further to JPMorgan, remember, the three are the official ones that we are

expecting.

JPMorgan said it is pretty much likely there will be more than four. He sees as many as six. Two -- one, two, three, four, five -- oh, give me

another green, another yellow, there we go. He sees six.

Finally, Bank of America officially forecasting -- wait for this -- one, two, three. They are the official, four, five, six, seven and they are

predicting seven hikes.

Now, why do we show it to you like this? Because this shows where we are, where officials thinks we're going to be, and what private economists who

are often right, think we're going to end up.

Larry said -- by the way, we'll be using this again and again, over the course of a few months to show you the difference between what people

think, what officials believe and what's really happening.

Larry Summers explains the Fed, bearing in mind, all of this, needs to thread the needle very carefully indeed.

(BEGIN VIDEO CLIP)

LARRY SUMMERS, FORMER U.S. TREASURY SECRETARY: It's a narrow ledge, the Fed has put itself on to, and there are risks of falling off onto either

side.

If they act with insufficient rigor, then we'll end up entrenching an even higher inflation rate, and the ultimate pain will be greater. If they

induce a recession, that will have a very substantial -- very substantial costs. So it's a difficult balance that has to be struck.

(END VIDEO CLIP)

QUEST: Loretta Mester is the President of the Federal Reserve Bank of Cleveland, and a voting member of the F.O.M.C.

I've taken away my balls and tubes, which will set the interest rates, but you do set the interest rates in the United States.

Let me start the discussion. I will say it before you do. The decisions will be data dependent and the Fed will be watching the data coming in and

making decisions in accordance with that data.

So as they say, all protocols observed. Now, we can get to it. The reality is, you've said three in the past, you've come out openly and said three

rate rises. Being data dependent from where we sit now, do you think it's likely to be more this year?

[15:10:11]

LORETTA MESTER, PRESIDENT, FEDERAL RESERVE BANK OF CLEVELAND: Well, you know, we're in the process of constructing new summary of economic

projections for the March meeting, but the inflation data has continued to move up. So I can imagine that I'm going to pencil in more than three, but

I really do believe that we need to really look at the data and how it informs, right, its economic and financial developments and how they affect

the outlook, and then the risks around the outlook and that will determine kind of what the ultimate path will be.

I think, I'm supportive of moving the rate up in March. I think, over the next couple of months, we're going to need to see further rate increases.

And then, you know, by mid-year, if I don't see indications that inflation is on a downward trajectory, which I'm expecting in my forecast, then we

might have to speed up the removal of accommodation.

But if we see inflation moving down in accordance to my forecast, then we might be able to slow down rule and we all accommodate.

QUEST: The problem, of course now is that we're into these issues of monetary lag and the difference between acting now, and when you're going

to see the response, which can be many months.

So you've got to -- this is the hardest part of monetary policy now, isn't it? It is anticipating a move now, and seeing the reaction in eight, nine,

ten months' time.

MESTER: Yes. I mean, you have to be forward looking. Monetary policy affects the economy with lag -- long and variable lags. You don't know

exactly when, but we should be able to start seeing, right, the monthly increases in inflation moving down. Right?

Some of that will be dependent on monetary policy. Some of it will be because supply conditions, and those constraints from the bottlenecks and

the other constraints on supply, probably will ease this year, certainly the businesses we've talked to.

Many of them think that it'll ease in the second half of this year, or some think it will be next year. But you know, they all expect some easing in

that, and that also will lead to lower inflation rates.

So I think it's going to be a combination, which is why I think inflation will be moving down this year, but it'll remain above two percent. And so I

think, job one for us now is to remove emergency accommodation, right, in a way that'll control inflation, and maintain the expansion and healthy labor

markets, and that's what's going to determine our path.

We're always looking at our dual mandate goals, and that's kind of our thought.

QUEST: Do you regret the persistent use of the word "transitory" to describe inflation, which loads many into believing that, you know, that

the Fed was not going to act consequently, those who say that the Fed is now behind the curve, and should have taken some measures -- maybe not

dramatic -- earlier?

MESTER: Yes, I was never a fan of using "transitory" as long as we did, and I've said that publicly. I think what the word was meant to convey was

that a lot of the factors affecting the inflation readings were five constraint factors, rather than something that would be lasting and that

monetary policy could address.

But it gave the impression that just as anybody would reasonably think that inflation readings would come down quickly, and that was unfortunate, and I

think now, our language is better that we got rid of calling it "transitory" but pointing out that some of what is happening in inflation

is supply side, and some of it is robust demand.

QUEST: If that's the case, how much do you -- and I know you're not fine- tuning a Swiss clock, I realize that, but the higher rates are designed to slow consumers or can slow the demand side of the equation, so how much

would you be comfortable seeing the economy slow, as a result of these rate increases?

MESTER: Yes, I mean, there is no doubt the economy is really -- there is a lot of demand momentum, and the issue is that demand is out of balance with

supply because supply is constrained.

So we need to take out accommodation and yes, we do expect -- I do expect by doing that, financial conditions will get a little less accommodative

and we'll see demand move down, but remember GDP growth last year was five and a half percent that's a really, really high rate. We haven't seen that

rate since 1984.

[15:15:12]

So again, and labor market is the same thing. Labor markets by many measures are very tight, and you know, that's a case where the economy,

right, the real economy can support raising interest rates to bring the man into better balance with constrained supply.

QUEST: On a more, go slightly deeper into the weeds, but I think fascinating, regardless, the ballooning of the balance sheet, the Fed's

balance sheet, which now has to be addressed.

Now, if we look at the Bank of England, they've pretty much made it clear that reducing the balance sheet is one of the priorities, provided it can

be done without upsetting money markets and the financial plumbing.

I know this is -- I read the recent paper by the Fed on this, how you're going to do it. It's tricky, isn't it? As we saw once before, when you try

to reduce the balance sheet.

MESTER: Well, we put out the principles in January about you know how we're going to go about doing it, and in there, we made a clear statement

that the Fed funds rate is our primary tool of monetary policy. So we are working on what the exact implementation plan will look like in accordance

with those principles.

But my view is that, we should start sooner and go faster than we did last time because the balance sheet is so large, and the economy is in such a

stronger position and inflation is much higher.

I still think that should be sort of in the background, it's not going to be our primary tool, right? But we'll set up a plan, we'll announce it in

advance so that markets know what the plan is, and then our main tool policy will be that Fed funds rate.

And so that's how I imagine it going, but we haven't put out -- we're still talking within the committee about what the particulars will be. We have

announced that it will primarily be reduced and reduced significantly through runoff. My own view is that I could see us at some point during the

process selling some of our mortgage backed security portfolio, because one of the other principles we put out is that over the long run, we want to

move the portfolio back primarily Treasuries.

QUEST: You have been through several cycles, I suppose any of us who have doing this long enough have been through several interest rate cycles, both

in both directions. Does this feel any different to you, and the 2000 time -- does this feels different what we're facing and the decisions that the

committee has to make?

MESTER: So in a lot of respects, it feels different because of the nature of the shock. The pandemic was something we hadn't experienced before, and

the effects on the economy and our reaction in terms of what we had to do to the economy because of the pandemic is very different than things we

experienced before.

On the other hand, we have the experience of having used emergency tools before. So that actually, we were in a good position, because we had done

that before. We've been in the position of having to move our balance sheet back down, so that's good. That's information that's very helpful to us,

and we've been in this position before of having to navigate an economy where there is risk and uncertainty.

So in that respect, right, we know what we have to do in terms of reducing emergency accommodation, getting inflation under control, which is so

important because we want to sustain an inclusive expansion and the best thing we can do at this point is get inflation under control, so that the

expansion will continue and labor markets will remain healthy.

QUEST: President Mester, I'm very grateful, Ma'am, for your time today. Thank you.

MESTER: Thank you.

QUEST: QUEST MEANS BUSINESS.

New details now on a young New York couple accused of trying to hide $4.5 billion worth of stolen Bitcoin, in a moment.

(COMMERCIAL BREAK)

[15:20:06]

QUEST: Call this money laundering millennial style. Authorities in the U.S. say they've made their largest seizure of cryptocurrency ever, and

it's from a New York City husband and his wife, who had been charged with trying to launder the stolen funds.

Their online presence wasn't unusual for a couple in their 30s. There's a photo of them on Instagram that you're looking at on your screen at the

moment. The wife can be seen on YouTube rapping somewhat awfully to be honest, under the moniker Razzlekhan.

[VIDEO CLIP PLAYS]

QUEST: A few Wall Street landmarks in that video, all of which do prove to be relevant as CNN's Zane Asher tells us.

(BEGIN VIDEOTAPE)

ZANE ASHER, CNN BUSINESS CORRESPONDENT (voice over): They are being called the crypto Bonnie and Clyde, 34-year-old Ilya Lichtenstein and his 31-year-

old wife, Heather Morgan have been arrested on charges of conspiring to launder $4.5 billion in stolen cryptocurrency.

The New York couple were arrested following a six-year investigation into the hack of a virtual currency exchange. They have not been charged with

the hack and their attorney could not be reached immediately for comment. So far, officials have seized $3.6 billion of those funds.

LISA MONACO, U.S. DEPUTY ATTORNEY GENERAL: This is the largest seizure of cryptocurrency ever by U.S. law enforcement. It is also the department's

largest single financial seizure in its history.

ASHER (voice over): A major win for law enforcement amid a growing number of heists from cryptocurrency platforms, hackers have stolen hundreds of

millions of dollars in recent years. This alleged scheme stems from the hack of the digital exchange, Bitfinex, which trades Bitcoins.

The couple had an interesting online presence. Heather Morgan posted rap videos online under the name Razzlekhan and called herself "The Crocodile

of Wall Street." She was also a contributor for "Forbes and Inc." Magazines.

In a 2020 "Forbes" article she wrote about protecting your business from cyber criminals. The two have been charged with conspiracy to commit money

laundering and conspiracy to defraud the United States.

They face up to 25 years in prison if convicted.

MONACO: The message to criminals is clear, cryptocurrency is not a safe haven. We can and we will follow the money no matter what form it takes.

ASHER (voice over): Zane Asher, CNN, New York.

(END VIDEOTAPE)

QUEST: Now that you heard that, crypto heists have exploded in recent years. A few that you may not have heard, a crypto exchange BitMart says

hackers made off with $150 million in December.

In 2018, thieves took $530 million from a crypto exchange in Japan and $600 million Bitcoin was stolen from Poly Network, a record haul from the Poly

Network.

[15:25:06]

The U.S. Justice Department says the suspects here were trying to launder $4.5 billion worth of bitcoin. It was worth only $70 million when the

hackers stole it from -- allegedly stole it from Bitfinex.

Theresa Payton is formerly the White House Chief Information Officer in the Bush administration, now chief executive of Fortalice Solutions.

What did they do? I mean, how did they do it? They move money. They bought Bitcoins, they sold them. But what did they do?

THERESA PAYTON, CHIEF EXECUTIVE, FORTALICE SOLUTIONS: Yes, so it's interesting, I actually read the F.B.I.'s arrest charges on their website,

and I don't see that they're actually being charged with the hacking. They are being charged, allegedly with basically the money laundering and using

stolen funds.

And you know, it is interesting, even though we're talking about cryptocurrency, which is sort of, you know, kind of a more modern day, kind

of cybercrime. They followed sort of the old Hollywood movie playbook of now that I have ill-gotten gains, what do I do with it? How do I fence it?

How do I launder it, so that people can't follow the money trail? But in this case, the F.B.I. did.

So they did things like buy gift cards, they hopped around from different cryptocurrency platforms, they tried to put it into regular currency, they

bought different types of goods and services, really trying to make the money trail hard to find because if you want to find who conducted these

hacks, you have to follow the money

But I do not see where either one of them has actually been charged with hacking the exchange, just the fact that they took the stolen

cryptocurrency from the exchange and tried to launder it.

QUEST: But they always say that the fence is the most important part because if it's stealing diamonds, I've watched my fair share of movies --

if you're stealing diamonds, it's useless if you can't get rid of them.

Now, one would have thought that those who hacked might have been sophisticated enough to know how to move the stuff around. But how

difficult is it to move $3.5 billion around in cyber anonymously?

PAYTON: Well, it is challenging, because even though the cryptocurrency platforms, you know, part of what they talk about is privacy, anonymity,

you're not registered necessarily as yourself with your name. It is wallets with digital IDs. But at some point, in order to spend that money, in order

to purchase hard goods, there is some type of a transaction where you will have to identify yourself.

What's fascinating about this one is there must have been some inclination that this couple was moving the funds around because there were Court

authorized search warrants sort of online accounts and other information.

QUEST: So when the Deputy Attorney General says, you can't hide in the cyber, well, some of us would think that's just the sheriff in town warning

crooks, but the fact they managed to find the money and follow it does give rise to the idea that they're not chumps in the authorities.

PAYTON: No, this was an incredible example. There is international collaboration here. A German police department helped out, multiple

agencies worked together here to follow the money and to find these two, there will most likely be others. Maybe not on this particular case, but

there will be others that will probably be discovered that we're also laundering stolen cryptocurrency platform funds, and really it's in the

best interest of the cryptocurrency platforms to cooperate with authorities to make sure that they are seen as a safe and secure place to store your

Bitcoin or your cryptocurrency whatever one you choose in your digital wallet.

QUEST: Theresa, I'm grateful for you today. Thank you and we'll be back to talk to you again as I try to understand it, thank you so much.

PAYTON: Thank you.

QUEST: Now, Breaking News from the Beijing Olympics. The medal ceremony for their figure skating team has been delayed and it comes because sources

say an athlete, a Russian Olympic Committee athlete tested positive for prohibited substance.

We'll bring you more on this in just a moment.

We continue while we wait to get details, it appears the pandemic endgame is playing out in Europe. England could be the next country to lift all

remaining restrictions, in a moment, Bianca Nobilo will be with us from London.

(COMMERCIAL BREAK)

[15:30:00]

(MUSIC PLAYING)

QUEST (voice-over): I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. In London, where we'll be, all COVID-19 restrictions set to be

lifted in recent weeks as the World Health Organization says Europe is reaching its pandemic end game.

The chief executive of Boston Dynamics tells me how his company's animal- like robots will soon be working alongside humans in DHL warehouses. That's all after the news headlines, where you would expect that, because this is

CNN and, here, the news always comes first.

Russia says it's scaling up joint drills in Belarus because of a growing threat from NATO which is now, quote, "much higher and more dangerous then

before."

Those exercises are set to begin on Thursday. The NATO chiefs calling the build-up in Belarus the largest since the Cold War.

Last night, two people confirmed dead in Madagascar following a devastating cyclone hit over the weekend. More than 60,000 people are also displaced

after their homes were damaged or destroyed. It's the second major storm to hit the nation island in the past two weeks.

British media published a new photo which is said to show the British prime minister, Boris Johnson, at an office gathering during COVID-19 lockdown.

Boris Johnson seen standing next to a colleague and near a bottle of bubbly. "The Mirror" says it was taken on December 15th.

London police initially decided not to investigate this gathering but now say they might reconsider.

Starting tomorrow, New York state will no longer require masks or proof of vaccination at most indoor businesses. The governor says she's lifting the

mandate while letting it expire because COVID cases and hospitalizations are falling. For now, masks are still required in schools, hospitals and

nonpublic transport.

(MUSIC PLAYING)

QUEST: England may be approaching the end of the pandemic. So says the British prime minister, Boris Johnson, if the current trend continues. He

told Parliament he would be presenting a government strategy for living with COVID when Parliament returns from the short recess this month.

[15:35:00]

He says it could mean lifting the remaining sanctions and restrictions in England and that includes self-isolation requirements this month, a full

month earlier than planned.

The prime minister says England is on track to live with COVID-19. Other European countries are doing likewise. Denmark lifted its restrictions,

including mask mandates and vaccine passes. It still offers PCR tests to the public and encourages at-home testing before gatherings.

Norway has followed. It lifted curfews on serving alcohol and dropped the limit on visitors in private homes, still asking people to stay a meter

apart and wear masks in crowded settings.

Sweden has announced it was lifting most restrictions, including an alcohol curfew and vaccine passes. A return to work and to face higher education

will be more gradual. Bianca is with us now in London.

All fascinating stuff, Bianca. But I'm more interested in the latest party picture. The prime minister, December the 15th, we knew about the event.

Why does this picture of him standing behind somebody with a bottle of bubbly there and somebody wearing some tinsel around their neck, I mean

this could be the end of a work day. They could have all just been getting together in an office since they are all working hard at Number 10.

Why is this relevant?

BIANCA NOBILO, CNN ANCHOR AND CORRESPONDENT: Well, yes, it's the tinsel that did it.

No, I truly don't know. The Metropolitan Police say they'll now look at the event again and reexamine it on the basis of this photograph, which is

strange when we consider how many hundreds of documents and photographs the Metropolitan Police already have as part of their investigation.

I'm sure you've seen that Boris Johnson's former aide and chief nemesis in the press, Dominic Cummings, took to Twitter, saying there are much better

pics than that at that party. So I'm sure there are more to come.

QUEST: Is there a feeling yet, among the British people -- we know this, we know it was sleazy, horrible; he broke the rules. He behaved like he

doesn't have to behave like the rest of us. But we want to move on.

Or is it deepening?

NOBILO: There appear to be parallel tracks. One of Boris Johnson's new appointees in the mini cabinet reshuffle came out and said, oh, normal

people going about their lives don't care about these parties anymore. I don't think that's a fair assessment. I think people are frustrated and

feel really hurt and betrayed by some of the government's actions.

I do think the sheer number, the volume of them and the constant drip, drip in the media of photographs and scandalous details is numbing the public

somewhat, because there's only so much scandal you can really take on a daily basis.

So I think the number of events is definitely lessening the individual impacts now.

QUEST: Does life feel normal in London?

It looks like all restrictions will be gone by the time I next get there.

So does it feel normal?

NOBILO: It does. I think there's flashes of real pre-COVID normality. It's still a little deserted, like the office here. We have yet to have

everybody return. Public transport is still a bit more sparsely populated than it usually is.

But you can have more normal moments without fear and more places you go to begin to resemble what we remember. So the tide is definitely returning.

QUEST: Back to Boris, the Tory Party is notoriously brutal if they feel that their own jobs, their own seats are in danger. They will ditch him

quicker than I can say Bianca, thank you.

However, has he got time until the local elections in May?

NOBILO: That's a school of opinion. I think the coordination isn't at a level yet that we'd be able to say definitively either way. I think if the

threshold is met, it will be by accepted rather than a coordinated effort.

However MPs I've been speaking to, do remind me, even though the Tory Party has its rather fratricidal tendencies, that it still isn't a good look. It

can expose the party's instincts and make people look like they're betraying their colleagues and their leader.

Even if necessary, it is not something they relish and I do detect less relish with this one than with when they were trying to oust Theresa May as

well. So I think that's keeping things on ice.

However there's also been an uptick in briefing against the chancellor Rishi Sunak, who's considered to be one of the most likely contenders to

fill the prime minister's shoes if he was ousted in a leadership contest. So I think that also might also indicate that there is concern there, that

there's a breath of support emerging for him.

QUEST: We'll watch. Thank you, Bianca Nobilo. And you'll be with us top of the next hour, 5:00, won't you?

NOBILO: I will be, yes.

QUEST: Thank you.

As you and I continue today, automation nation, DHL spending $15 million on a fleet of robots. I'll speak to the company that makes and sells them in a

moment.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

[15:40:00]

(MUSIC PLAYING)

QUEST: DHL says it plans to put $15 million worth of Boston Dynamics robots into its warehouses. If you're thinking of these sci-fi cyber bots,

think again. The warehouse androids are designed for heavy lifting. The first of them is called Stretch and can unload trucks, pallets and more.

DHL plans to roll them out in depots nationwide. Joining me is Robert Playter, the CEO of Boston Dynamics.

Always good to talk to you. Look, I can remember the car ads with robots made by robots.

How are these robots, you remember it yourself, how are these robots more advanced?

What are they doing, bearing in mind we've seen some form of robotics in the industrial production for a time, how is this different?

ROBERT PLAYTER, CEO, BOSTON DYNAMICS: This is the first mobile manipulation robot. So Stretch is a mobile case picking robot. It can move

around the warehouse. It has vision integrated with it. But it also has a manipulator.

So in terms of the job it's doing, it's the first manipulation robot that's mobile for the warehouse.

QUEST: And can it think?

Can it recognize, hang on, that's not over here; it's actually over there, because somebody left it there by accident, I'd better go over there and

get it instead.

I mean, what's its capacity for AI?

PLAYTER: That's a key question so, you know, at the back of the truck, it can look, it can kind of cascade of boxes that fall down or boxes will look

different than what you expect it.

So the AI allows the robot to adapt to whatever is in the back of that box or something unexpected happens, like maybe a box falls. It needs to

recognize that and pick it up and the AI allows it to do that.

QUEST: I don't -- I realize that you're making the robots, so, in a sense, it's your job to sell the robots.

But is this taking jobs?

Inevitably, yes is the answer; however one hopes there is a plan for those people that would have done this before, because this is the future, which

is why I question it that way.

PLAYTER: Yes. You know, the interesting thing about this generation of robots is it doesn't take a Ph.D. to operate them. They're going to be easy

to use. So the people who are unloading trucks today will be operating robots tomorrow. It's really like a power tool.

[15:45:00]

PLAYTER: And so, plus, you know, there is a story in "The Washington Post" in October of last year, that 490,000 jobs are unfilled in logistics and

transportation. So our customers are having a hard time finding people to do this work.

QUEST: And when we look at this, where does it go?

Because I'm always delighted to hear the vision of when you've taken what it's doing and you scoop it out, extrapolate it, 5-10 years hence, what's

it doing then?

PLAYTER: I think some of the next -- you know, we see the future being, adding mobility to more and more dexterous manipulation. So right now we

can manipulate a box and that's still a fairly basic manipulation task.

But if we build better end effectors or better hands we could pick up more complicated parts, maybe playing a role moving parts around a manufacturing

facility instead of just a warehouse. Or operating and doing repair work in a dangerous environment, where a person can't go.

Maybe you really need dexterous manipulation to figure out why a piece of equipment is failing. And it's clear across the country and you don't have

to go because a robot can be there.

QUEST: What's the one thing your clients say they want, your customers?

Because obviously, you design something like this, together with -- obviously, there's an element of a bespoke nature to it.

So what's the one thing, if you generalize across your customer and client base, what are they asking for?

PLAYTER: Reliability, that a job can be done reliably, that they know it will be done well; adaptability. You know, some amount of adaptability, the

new generation of robots can adapt to an environment and you don't have to build an environment just for them.

So being able to go into an existing facility and adapt to what they have present is really important instead of building a purpose-built facility

just for the robots.

QUEST: Is there anywhere or anything that you believe a robot would not be suitable for?

I realize I'm just opening myself up to a huge amount of eyebrow raising and guffawing from the peanut gallery but you know what I mean.

Are there industrial or manufacturing processes you think, I don't ever see a robot going there?

PLAYTER: Well, I think that, certainly, the role of manipulation is far out. You know, the hands that we have are going to be tough to match for

many years. And so I don't see robots doing really dexterous manipulation for a while yet; I think it could take another 10 years to really get

there.

QUEST: Ten years?

That's around the corner. I thought you were going to say it'll never do it. You said 10 years.

PLAYTER: I think the other thing is that, you know, look, robots, as impressive as artificial intelligence is, robots don't have the level of

intelligence that people do and won't for a long time.

So interacting with people in a way that are, you know, the benefits of service jobs and interacting with folks, you know, I don't really see

robots replacing that.

QUEST: I think you are really trying to say, Richard, I don't think they'll replace you.

(CROSSTALK)

QUEST: Robert, thank you very much, indeed. Good to see you sir, I appreciate it.

PLAYTER: Thank you, Richard.

QUEST: Somewhere in this world, there is somebody saying, you are deluding yourself, Richard. Absolutely, you will be replaced.

Coming up, a morning cup of coffee is becoming more expensive. Not everyone is hurt by the rising prices.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

[15:50:00]

(MUSIC PLAYING)

QUEST: Coffee prices hit a new 10-year high on Wednesday. Particularly distressing because you know I'm not only fond of my morning cup but my

being a barista was my pandemic project. I took up learning not only how to make decent coffee but latte.

That was one of my early efforts -- OK, it's only a picture a mother only could love but you get the point.

I don't mind paying extra if farmers and growers are seeing the gains. Stefano Pozzebon takes a look at why the price is rising and who is

affected.

(BEGIN VIDEOTAPE)

STEFANO POZZEBON, CNN CORRESPONDENT (voice-over): The price of coffees are soaring, affecting customers.

NOAH WUNSCH, COFFEE CUSTOMER: I'm a man who likes a small coffee and it has always surprised me, the price increase for a small coffee.

POZZEBON (voice-over): And retailers.

UNIDENTIFIED FEMALE: I actually raised the whole bean coffee price last week, just because we have seen increase.

POZZEBON (voice-over): But what about the producers?

Meet Luz Andela, an indigenous coffee farmer in southwestern Colombia. For her, the price hike was very good news.

LUZ ANDELA, COFFEE FARMER (through translator): I bought a new bed. I had one already but we needed a new one. With better coffee prices, I could buy

that and other small things.

POZZEBON (voice-over): The price of coffee nearly doubled since this time last year. One cose (ph) reduced output last year by the world's largest

producer, Brazil, after first a drought and then frost related to extreme weather.

But Colombia's coffee, which grows at a higher altitude and is of a different variety than Brazil's, was spared. The result: good business for

Colombia's producers.

ERVIN LIZ, FOUNDER, NATIVE ROOT COFFEE: Since the end of last year we have been able to start buying the coffee from 35 families, all of them

production. So that has been a -- almost double the production that we were doing just about 8-10 months ago.

POZZEBON (voice-over): Native Root is a family run, specialty coffee company that purchases exclusively from indigenous producers like Andela.

Online purchases, where customers can buy directly from the producers, doing away with middlemen, like in the case of Native Root, has increased

during the COVID-19 pandemic.

Independent farmers are being paid more for their product and, in rural Colombia, that has been even a more lasting effect.

Not far from Andela's field, another bush mixes with the coffee trees.

POZZEBON: This is a plant of coffee while this is a plant of coca, the main ingredient of cocaine. Now in this region, coffee is far more present

than coca. But if the prices of coffee were to fall, the farmers could always switch to the illegal trade.

POZZEBON (voice-over): Many farmers here remember when coca was the most valuable plant. But that has changed. For years, Colombia financed projects

to replace coca with other legal crops with mixed success.

Where the production of coca has grown in other regions of the country, here, the farmers abandoned coca because higher coffee prices brought

better profits. And for now, social and economic interests are aligned -- for CNN, this is Stefano Pozzebon, Carabento (ph), Colombia.

(END VIDEOTAPE)

(MUSIC PLAYING)

QURAISHI: Our breaking news now from the Beijing Olympics. The medal ceremony for the figure skating team has been delayed. It's after one

athlete on the Russian Olympic Committee tested positive for prohibited substance. Alex Thomas is in London. Alex is with me.

[15:55:00]

QUEST: My understanding -- and we're not naming the person involved -- but my understanding is this is from a test at the end of last year or

something. Put me right here.

ALEX THOMAS, CNN CORRESPONDENT: Yes, initially, when the medal ceremony for the team figure skating competition was delayed, we were told by the

International Olympic Committee, the organizers, that it was because of a legal problem.

And it's now since emerged, through reporting of a Russian newspaper and our own sports analyst, Christine Brennan, it is down to an issue of doping

affecting the Russian team, who won gold ahead of Team USA and Japan.

With Canada in fourth, there is a potential some way down the road for them to get onto the medal podium, though they won't actually have the honor of

standing there to receive the medal.

It is the latest in a long line of doping scandals to affect Russian Olympic athletes, going back to state sponsored doping they were guilty of

many years ago, that was only unearthed to an investigation by journalists and, of course, Russia not competing at these Winter Olympics under the

name of Russia. They are there as the Russian Olympic Committee, those athletes who have proved they are clean and able to compete.

QUEST: So if -- and I'm putting lot of caveats -- this proves to be a valid doping, does this blow the whole Russian doping issue back into the

news?

And back, I mean, does it put it, you tell me?

THOMAS: It certainly does, because many feel that Russia actually leniently dealt with it in the first place and that there is no

transparency in the way they test their athletes and there's no transparency in the country as a whole.

So how can you be sure of any doping system going on?

Of course, the IOC and others would say athletes can train and live outside of Russia, still proves they are being tested regularly and proves they are

clean. But it's a major blow to Russia hopes of emerging as a clean nation.

QUEST: Alex, the IOC in trouble with paying over the way they've been handling Peng Shuai and the critics are very fierce on that. The IOC could

be in trouble again with Russia over the way they've handled the doping scandal.

What's wrong with the IOC?

THOMAS: I think the International Olympic Committee is finding it very difficult, staging Olympic Games in China, with all its political

ramifications globally, to live up to its ethos on paper. It does talk a good game and its ethics on paper seem very good. But in practice, they

don't really want to court controversy.

QUEST: Alex, grateful you came to us so quickly, appreciate it. Thank you, sir.

We will have the closing bell for you in just a couple minutes from now.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

QUEST: Trading on Wall Street ahead of the bell and here you see the Dow rally toward the close, it's a good, strong performance for the Dow Jones,

not the best of the day but it's still a good performance.

If you look at the triple stack, that's also doing extremely well, with the Nasdaq roaring ahead. We'll get some results from Disney coming up in just

a moment or two.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest, what a busy hour we've had together. Anyway, whatever you're up to in the hours ahead,

there's my bell, here's the New York stock exchange bell. I'll see you tomorrow.

END